The Affordable Care Act (ACA) is under continued attack from the Trump administration, and the latest assault threatens coverage of preexisting conditions and the viability of the subsidized health insurance Marketplace—unless states intervene to protect their residents.

Ironically, the latest effort to destabilize the ACA comes just a few days after federal officials and Governor Walker announced that Wisconsin has gotten approval to implement what the Governor is calling a “Health Care Stability Plan.” Although that plan will probably help hold down Marketplace insurance premiums in 2019, it will ultimately be ineffective if state lawmakers don’t take additional steps to defend the ACA from the ongoing attacks by the Trump Administration and Republican Attorneys General (who continue to challenge the law’s validity).

The latest attack on the ACA is a new federal rule dramatically expanding the definition of “short-term” insurance plans, which are exempt from the law’s consumer protections. As a recent Washington Post column explains:

Short-term plans were initially designed to do exactly what they sound like: provide stopgap coverage to tide consumers over until, say, school starts in the fall or that new job begins.

Under the Trump administration’s new regulation, however, these plans will soon be allowed to last up to 364 days and to be renewed for up to 36 months. So, not so short after all.

The new so-called short-term plans aren’t required to cover essential health benefits, such as maternity care, prescription drugs, and mental health services. They can deny coverage or charge higher prices to people with pre-existing conditions. Many groups representing health care consumers and providers have opposed this expansion of what they refer to as “junk insurance” because it creates a huge threat to the stability and economic viability of the ACA insurance Marketplace, and to coverage of pre-existing conditions.

A recent blog post by the Center on Budget and Policy Priorities (CBPP) explains that inexpensive plans with skimpy benefits will lure younger and healthier individuals away from the individual and small-group markets. Because that will leave a costlier group behind in the ACA Marketplace, it poses a significant threat to the gains that have been made under the ACA:

This dynamic, known as adverse selection, would raise premiums for traditional, more comprehensive health coverage and undermine ACA protections for people with pre-existing conditions. Meanwhile, healthy people who enroll in these plans may find themselves facing gaps in coverage and exposed to catastrophic costs if they get sick and need care.

A piece of potentially good news is that not all states will be adversely affected by the new rule. That’s because a few states have set their own standards for the length of short-term plans, and a number of other states are considering following their example. (See the map in the CBPP blog post.) Unfortunately, Wisconsin is not one of the states that have proposed that remedy.

President Trump has said on a number of occasions that he is using administrative rules and policy changes to “gut” the ACA. But thus far, he has only succeeded in driving up the premiums charged by insurance companies, and causing a modest drop in people participating in the ACA insurance Marketplace. The primary reason why there has not been a bigger decline in Marketplace participation is that more than four-fifths of enrollees are eligible for premium tax credits, which rise when premiums increase. However, people with income that is at least four times higher than the federal poverty level (a little over $48,000 for an individual or about $98,000 for a family of four) are ineligible for those tax credits, so they are bearing the brunt of the premium increases resulting from the Trump administration’s actions.

Although the President has yet to achieve his goal of gutting the ACA, some of the more recent actions create much more serious threats. For example, the new rule on “short-term” plans could cause a much larger and more destabilizing exodus of people from the ACA Marketplace than we have seen to date.

Another serious threat is the lawsuit challenging the constitutionality of the ACA, which was filed by a number of Republican Attorneys General, including Wisconsin’s Attorney General, Brad Schimel. According to Schimel, if that lawsuit achieves his objective, it will strike down the entire ACA, including coverage of pre-existing conditions. Governor Walker authorized Schimel to participate in that lawsuit.

The stabilization plan being implemented by the Walker administration is a reinsurance plan that absorbs some of the cost of sicker Marketplace participants. That reduces risks for insurers, and based on the preliminary 2019 premiums unveiled last week it appears that it will help hold down costs for consumers. That will be especially helpful for the small fraction of Marketplace participants with income above 400% of the poverty level, who do not qualify for the premium tax credits.

Although Wisconsin’s reinsurance plan provides some near-term stability to Marketplace plans, it is no defense against the ongoing assaults on the ACA. If Governor Walker truly wants to stabilize the health insurance Marketplace and protect coverage of pre-existing conditions, he needs to:

• Propose state legislation that limits the length of short-term insurance plans that are exempt from ACA standards.
• Ask the Wisconsin AG to withdraw from the lawsuit challenging the constitutionality of the ACA.
• Ask the President to stop taking administrative actions that threaten coverage of pre-existing conditions and the viability of the insurance Marketplace, which is especially important for rural Wisconsin.

“Stabilizing” the health insurance market is a great goal. In the coming months, we will have an opportunity to question politicians about that goal and to judge for ourselves whether they really want to protect the ACA insurance Marketplace and the law’s guarantee of coverage that protects people with preexisting conditions.

Jon Peacock