Trump's cancellation of Obamacare payments shouldn't derail Iowa's stopgap plan, leaders say

Iowans who buy their own insurance won’t be immediately affected by President Trump’s decision to cut off a major stream of Obamacare money because state regulators and the sole insurance carrier offering such policies had already assumed he would do so, officials said Friday.

Trump decided Thursday to follow through on threats to cut off “cost-sharing” payments under the Affordable Care Act. Those payments reimburse insurers for reducing deductibles and other out-of-pocket costs for moderate-income Americans who buy their own policies. Critics of the law, also known as Obamacare, have long contended the payments are illegal. Trump agreed with them in curtailing the payments, even though many experts say the move could actually lead to higher costs to the government. They say that's because the move will force up premiums and the Affordable Care Act subsidies many Americans receive to help pay them.

Iowa’s individual health-insurance market has been rocked by instability, with just one carrier planning to sell such coverage here for 2018. That carrier, Medica, raised its proposed premium increase from 43 percent to more than 57 percent in August, after Trump threatened to cut off the cost-sharing payments.

Iowa health insurers are receiving about $48 million in such payments this year, state officials say. This summer, Iowa Insurance Commissioner Doug Ommen proposed redirecting that money and the more than $300 million in Obamacare premium subsidies in a “stopgap” proposal that he said would shore up the state’s individual insurance market. But Ommen’s office later altered the proposal in a way that would no longer rely on any cost-sharing money for 2018.

Iowa leaders are still awaiting word on whether federal officials will approve the stopgap proposal. Time is running out, with less than three weeks remaining before consumers are to set to begin signing up for individual coverage for 2018, on Nov. 1. Such coverage is for people who don't have access to employer-based insurance or government programs, such as Medicare and Medicaid.

State leaders noted Trump’s new move wouldn’t cancel Obamacare’s separate premium subsidies, which would be the main source of money for the stopgap proposal. “This decision by the federal government does not impact Iowa's stopgap measure one way or the other,” Brenna Smith, spokeswoman for Gov. Kim Reynolds, said in a statement to reporters Friday.

Ommen’s proposal would make subsidies available to Iowans who now make too much money to qualify for Affordable Care Act subsidies. The plan also would help insurers shoulder the cost of members who use more than $100,000 worth of health care in a year. Ommen contends the plan would lead to dramatically lower premiums because it would ease carriers’ financial risks and attract more young, healthy consumers to the risk pool. Without it, he predicts more than 20,000 Iowans will drop their insurance.

The proposal’s critics say it would harm many lower-income Iowans by leaving them on the hook for thousands of dollars in annual deductibles. The latest version of the stopgap plan offers more help to those on the lower end of the income scale, but skeptics say the plan would still leave too many Iowans vulnerable to unaffordable out-of-pocket costs.

The American Cancer Society of Iowa has been a vocal critic of the stopgap plan. Noah Tabor, a lawyer for the group, said Friday that state leaders should give up on the proposal and prepare to sign up Iowans for coverage through Medica under existing Affordable Care Act rules, including subsidies for most applicants. There isn’t enough time to implement the alternative plan, he said. “The runway is not there to land this plane,” he said. “It’s time to figure out what’s next.”

Iowa’s two Republican U.S. senators, Chuck Grassley and Joni Ernst, remain staunch supporters of the proposal. Both Iowa senators said Friday they approved of Trump’s controversial decision to cut off the cost-sharing payments to insurers.

Grassley agreed with Trump that the payments were not legal, because Congress never specifically appropriated them. He held out hope for a bipartisan bill by Sens. Lamar Alexander, R-Tennessee, and Patty Murray, D-Washington, which would restore the payments and make other changes. “But there’s concern that the Senate minority leader (Sen. Chuck Schumer) will shut down any forward movement on a bipartisan bill, like he has to date,” Grassley wrote in an email released by his office Friday.

Ernst also expressed hope Trump’s latest move would force Democrats to the bargaining table to help pass a replacement for the Affordable Care Act. "It's important that Congress combine continuing these payments in the short-term with more flexibility to states on the health insurance issue. The reality in Iowa is that continuing the status quo simply isn’t an option because Obamacare is unsustainable,” Ernst wrote in a statement.

Cancellation of the cost-sharing payments would not immediately affect consumers because insurers would still be required to reduce deductibles for people with moderate incomes.

But critics predicted Trump’s move would backfire by leading some insurers to back out of markets or demand even higher premiums, which would lead to higher federal subsidies. Critics disputed his contention that Democrats are solely to blame for health insurance problems under the Affordable Care Act. “The Pottery Barn Doctrine — you break it, you buy it — applies to health care too. Congress and the Administration own the consequences of this unconscionable decision, lock stock and barrel,” Margaret Murray, chief executive officer of the national insurers’ group Association for Community Affiliated Plans, said in a press release Friday.