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Obamacare is alive and kicking, but Trump could try to kill it

  • Despite widespread reports of a "death spiral," the health insurance system known as Obamacare is alive and well.
  • But the longer-term health of the system depends heavily on whether the Trump administration and Congress take steps to undermine the program.

President Donald Trump on Wednesday threatened to cut off critical funding to Obamacare, which he and other Republican critics have repeatedly claimed is in a "death spiral."

But the latest data show that the program is alive and well in many states, especially those that have supported insurance exchanges since they were rolled out more than three years ago.

In Massachusetts, for example, consumers can choose from as many as 10 different insurance plans, generating competition that has kept a lid on premiums. Despite the withdrawal of insurers in some states, consumers in 34 states can still choose from two or more plan providers, according to data from the Kaiser Family Foundation.

And while premiums in some states have surged out of reach of some households, premiums have fallen in others, including Indiana, Rhode Island, New Hampshire, Washington, Massachusetts and Arkansas, according to Robert Wood Johnson Foundation data. In about half the states, a so-called Silver midlevel plan costs $325 a month or less, according to the data.

Still, consumers in other states are struggling to keep up with rising premiums. In 2017, Alaskans were paying about $901 a month, the highest in the nation.

With insurers now finalizing rates for next year, it's unclear whether those pricing patterns will hold up, especially given the widespread uncertainty about the next moves from the Trump administration and the Republican Congress.

Trump and other GOP critics have repeatedly said Obamacare, formally known as the Affordable Care Act, is collapsing and has suggested letting it "fail" to force Democrats to work on replacing it with a new program.

"It's frankly crushing our country," Trump told a meeting of senators Wednesday. "Being OK with Obamacare isn't an option for another reason. Because it's gone. It's failed. It's not going to be around."

That assessment ignores the millions of consumers who use Obamacare coverage and would face huge spikes in medical costs if the program was shut down.

Trump and other GOP Obamacare critics like House Speaker Paul Ryan are also ignoring multiple signs that the program, which its supporters acknowledge needs fixes, is alive and well in many states.

More than three years after the rollout of state and federally run insurance marketplaces, the program is finally stabilizing and insurers are seeing their profits grow, according to a Kaiser Family Foundation report last week.

A major reason for the improved health of Obamacare, the report said, was an increase in premiums approved this year to compensate for a larger-than-expected share of sicker patients.

But more recent data indicate that those premium increases were a one-time market correction, according to the analysis. Slow growth in claims for medical expenses also played a role in insurers' financial improvements, the report said.

To be sure, the future health of the Obamacare depends heavily on whether the Trump administration decides to try to sabotage the program by withholding critical federal funding.

Trump has suggested several times that he could eliminate the so-called cost-sharing reduction subsidies, which help pay for consumers' out-of-pocket health-care expenses. The administration could cut those subsidies as early as next month.

"When those payments stop, (Obamacare) stops immediately," Trump said Wednesday. "It doesn't take two years, three years, one year. It stops immediately."

Like much of the White House rhetoric, the pronouncement is unrealistically dire.

Insurers have already been bracing for an end to those payments, by proposed premium hikes of more than 20 percent for next year to make up for the possible lost funding.

On Tuesday, major insurers called on Congress to intervene and protect the cost-sharing payments with a formal appropriation.

"Our members and all Americans need the certainty and security of knowing coverage will be available and affordable for them," said Justine Handelman, senior vice president in the Office of Policy and Representation at the Blue Cross Blue Shield Association, which represents insurers nationwide.

Even if those cost-sharing payments remain in place, the Trump administration has additional tools at its disposal to undermine the health insurance system.

Earlier this year, the administration backed off more strictly enforcing the so-called individual mandate, which is designed to lower the average premium cost by widening the pool of subscribers to include more younger, healthier people. The failed GOP reform plan would have allowed insurers to offer minimum coverage to those consumers, which would have further driven up costs for older people or patients with chronic conditions.

Supporters of Obamacare note that the pool of those covered by the plan could be expanded with targeted advertising designed to reach the uninsured. The Trump administration earlier this year pulled the ads that encouraged people to sign up for health insurance.

While the White House has broad discretion over key provisions, the program's success also relies on continued state-level support, which has varied widely since the patchwork of state and federal marketplaces were rolled out in 2013.

Originally designed around state-based marketplaces, dozens of states, most of them controlled by Republican governors, balked at the plan, forcing consumers to buy insurance from a federal exchange.

Now, more than three years later, states that launched their own exchanges are seeing more insurers compete for business. That competition is also helping to contain the cost of these plans to consumers.

Of the 13 states that have three or more insurers offering coverage, nine have independent state-run exchanges or state marketplaces that use a federal computer platform. On the other hand, in the half-dozen states where only a single insurer remains, all of them rely entirely on the federal health.gov marketplace.

Many of those states with limited plan choices are controlled by Republican governors, according to analysis by the Center for Economic and Policy Research, which found that some 21 percent of the people living in states with Republican governors have only one insurer in the exchange. By comparison, 8 percent of the people living in states controlled by Democratic governors were limited to one insurer.