Democrats are fond of blaming Republicans for undermining Obamacare, especially as conservatives attempt to overhaul the law. But experts and insurers point out that while Republicans aren't blameless when it comes to the strength or fragility of the law, many of Obamacare's wounds were inflicted by the Obama administration itself.
The law struggled for years when Obama was in office, even though his administration created it. Many of the problems were the result of short-term fixes by the Obama administration through the use of executive decisions, waivers, and deadline extensions. These inflicted losses for insurers in the exchanges. Those decisions by Obama slashed choices for customers and hiked prices, especially for those who were not receiving federal subsidies.
The Obamacare law gives the secretary of Health and Human Services latitude to decide questions about open enrollment, customer outreach, and special enrollment periods. Leaving such issues up to a government healthcare agency meant experts could weigh in and provided flexibility and adjustment during the early years. This was arguably necessary, to a degree, experts say, given that the law overhauled the healthcare system and caused disruption for millions of people.
But some of the decisions that were made also injected instability into the insurance marketplace. Republicans and regulatory experts sometimes sued to prevent Obama's adminstratives, which they said overstepped the limits of presidential authority. This was particularly so when the president authorized federal payments to insurers, "cost-sharing reduction subsidies," without Congress making the necessary appropriation.
The way the law was written, and the executive actions heaped on top of that fragile structure, have made it easier to dismantle now that Obama is gone. The details of the law can change easily and significantly based on which political party is running the administration. Now many of the problems have been raised under President Trump, who does not want Obamacare to succeed but, rather, wants it to "implode" or be replaced.
"The current morass is in no small part due to the failure of Congress to protect its legislative authority over years of executive overreach," said Jonathan Turley, a law professor at the George Washington University School of Law. "Both parties have contributed to the rise of an uber presidency that can effectively negate or amend federal laws through executive orders. I have been a long critic of this trend and encouraged Congress to re-assert its inherent authority over both legislation and the purse. Presidents now wrongly treat bills passed by Congress as the start of the legislative process, subject to their unilateral corrections."
Insurers' struggles under Obama
Since Obamacare was made law, the White House and Congress have repeatedly changed the rules governing for insurers. Those moves have, for example, changed what types of plans insurers may sell, and withheld monies that insurers expected to receive under the law the way it was written, making it difficult for companies to profit and for customers to have access to the competitive market they were promised.
"Insurers can compete effectively in any game as long as they know the rules of the game from the start and as long as the rules don't change midway," said Greg Fann, a fellow of the Society of Actuaries.
But the rules did change. An early sign of trouble came during the first open enrollment period in 2013, when people began receiving cancellation notices about policies that did not meet Obamacare's requirements. They spoke out against Obama for breaking his oft-repeated promise that people would be able to keep their healthcare plans if they wanted to.
After that promise was proved false, the administration took action on Nov. 14, 2013, when the president announced that some people who purchased plans between 2010 and 2013 could keep the plans they already had. These, known as the "grandmothered" option (grandfathered plans were purchased before 2010), didn't have some of the protections Obamacare offered, such as the guarantee of coverage for preexisting illnesses or coverage for a range of services that included maternity care and mental health. White House officials commonly referred to them as "junk" insurance.
But to many healthier consumers, lower prices coupled with some coverage for preventive care offered an appropriate tradeoff, so they kept them.
Insurers were furious with the decision. They had been selling Obamacare plans for six weeks and had months to go. They had to contend with the chaos that ensued after the launch of the healthcare.gov website, which is where customers were supposed to buy insurance, which didn't work after it went live.
And then, there were also deadline changes.
"After open enrollment had already begun, and after plans already began enrolling people, suddenly insurers had to go back and throw whole calculations out the window in terms of whom they thought would be enrolling," said a health insurance industry insider who asked to remain anonymous to speak candidly. "That screwed up projections."
Healthier people stayed on their grandmothered plans because they didn't have a strong incentive to pay more for a plan they didn't believe they'd need. As a result, insurers had too few healthy customers in relation to sicker customers, creating what is known as an unbalanced risk pool. Disproportionately sicker and more expensive customers enrolled through the exchanges.
In later years, the Obama administration continued to allow states to keep older plans, and the Trump administration allowed this again for next year. Some 1.5 million customers in 32 states who might otherwise buy Obamacare insurance are expected to keep their grandmothered plans in 2018.
"I think there was a misestimation of how price-sensitive people are when they are shopping for coverage," said Dania Palanker, assistant research professor at Georgetown University's Center on Health Insurance Reforms. "I think from a point of view of risk pools in the exchanges, that was problematic policy."
Customers in the exchange were more expensive to cover than insurers expected. One study by Blue Cross Blue Shield Association found that in 2015, Obamacare customers cost an average of $559 a month compared to $457 a month for customers who get coverage through work, because people who purchase exchange plans see doctors and go to the hospital more often, and have more prescriptions.
The action on plans by Obama, intended to temper political backlash and give consumers more flexibility in the short term, sacrificed long-term stability and created uncertainty for insurers. It wasn't his only alteration to the law.
Obamacare called for many other decisions to be made as it was rolled out, but certain actions stood in the way of higher enrollment numbers, legal experts say. The first year, Obama delayed the employer mandate and provided waivers for people to side step the individual mandate that requires people to buy insurance or pay a fine. Then, Obama authorized cost-sharing subsidies to insurers without an appropriation from Congress. Insurers didn't know whether to continue assuming the payments would be made after a U.S. district judge last year ruled them unconstitutional. The Obama administration appealed the case, and it remains in limbo. Insurers continue to face uncertainty as the funds are being authorized under Trump, who has said he would consider cutting them off.
Josh Blackman, whose book Unraveled: Obamacare, Religious Liberty, and Executive Power, details administrative actions under Obamacare, said he believes the exemptions to the individual mandate had a significant impact on the troubles the law faced.
"The failure to rigorously enforce the mandate has to be the biggest sabotage to the Affordable Care Act," Blackman said.
Invoking Texas Sen. Ted Cruz's partial shutdown of the government in 2013 in an effort to defund Obamacare, Blackman added: "Obama did worse than Ted Cruz ever did."
Administrative decisions played a role in shortfalls to the law's expectations. Early Congressional Budget Office estimates of Obamacare forecast that 24 million people would be enrolled in the exchanges by 2016. But by the end of open enrollment, 11.1 million had signed up for the plans. About half of the shortfall can be attributed to employers not dropping people from their coverage and sending them to the exchanges, as had been anticipated, but the rest is attributed to people seeking alternatives or forgoing coverage.
For years, the most coveted customers have eschewed Obamacare plans: the healthy, young people who are too old to get coverage under a parent's plan. Analysts estimated that insurers lost about $5 billion through Obamacare in 2015, including big players such as Aetna, Humana, and UnitedHealth Group.
As Obama prepared to leave office and before the 2016 presidential election, insurers were pulling out in droves and premiums on mid-level plans were expected to rise by 22 percent nationwide.Customers also expressed dissatisfactions with the plans they had. In some cases, insurers are able to keep premiums at bay by narrowing their provider networks, but that means patients have fewer options for providers and face higher deductibles. The move, which may help an insurer's bottom line while still adhering to Obamacare's mandates, can be a struggle for patients as well as for doctors, who face lower reimbursement rates.
"Anytime someone's provider choice is not in their network it's a frustration, and a valid frustration, and will affect how they feel about the program," Palanker said. "The level of how detrimental it is to consumers comes down to a number of issues, including whether the network, while limited, is adequate."
All of these outcomes provided fodder for Trump to run on the promise of ending what he often called the "disastrous" and "failing" Obamacare.
The exchange market is projected to be even more diminished in 2018. Roughly 2.6 million Obamacare exchange customers live in counties where only one insurer is expected to sell coverage, though more insurers still could drop out.
And they continue to incur losses. Humana expects to lose $45 million and Aetna expects to lose $200 million this year. Molina has lost $230 million during the second quarter, some of which it attributed to the high costs of claims in the exchanges. Centene is one of few insurers that said it has profited under Obamacare, which it credits to having a model that is similar to its partnerships with Medicaid. It covers a small share of the market, roughly 1.2 million customers, but is planning to expand next year.
Obamacare's exchanges meet Trump and GOP
A number of factors led to those results.
From a business perspective, insurers had to overcome a large number of obstacles. Many counties where insurers struggled were in rural areas with few providers and few potential customers. Enrollees also were more expensive to cover than insurers expected, and they didn't know enough about their medical needs to price their premiums accurately. Before Obamacare, they could turn away customers with preexisting illnesses.
But policy and political decisions played a significant role. For instance, some health policy analysts have accused insurers of setting prices that were too low at the start, noting that a Congressional Budget Office report said they expected plans to cost more.
Robert Hinckley, chief strategy officer at Capital District Physicians' Health Plan, a nonprofit health plan that offers coverage in New York, counters that insurers priced as they did because of the pressure they faced from the federal government.
"I think the organizations that ran them came in with low prices because they were politically being told they had to, and what that did was drive down competition toward that price," he said. "In the first year or two, you had all these plans coming in way under price."
But Republicans aren't without blame. They also compounded the difficulties the law faced by injecting more uncertainty into the already fragile exchanges.
They brought the healthcare law's requirement for states to expand Medicaid to the Supreme Court, which ruled that the provision was optional. As a result, 19 states haven't expanded the program.
More people would have medical coverage now if more states had expanded Medicaid. Low-income people in non-expansion states, often with costlier medical needs, went to the exchange market, further destabilizing the risk pool. Those customers make up about 40 percent of the Obamacare enrollment population in the non-expansion states, compared with 6 percent in expansion states.
As part of a spending bill, Republicans also cut off risk-corridor payments, which were to meant to reiumburse insurers for their losses during the early years of Obamacare. The move was led by Sen. Marco Rubio, R-Fla., who called the payments "a taxpayer-funded bailout for insurance companies."
Fewer insurers would have lost funding they expected to receive from the federal government if Republicans hadn't cut off these payments, which largely caused nonprofit insurance cooperatives created under the law to go out of business.
"Defunding the risk corridors was important step that started to make insurers nervous about the stability of the market going forward," Hinckley said. "It was a promise in the bill."
Fann said those kinds of changes from Congress made it difficult for insurers to price plans. "Insurers can adapt to market rules, but it's important that they understand market rules and they aren't changed at the time of premium rate development," he said.
After Trump took office, Republicans, in not presenting a clear strategy for a replacement plan and in seeking to undermine the law, compounded the troubles by adding even more uncertainty to the market as they worked to repeal portions of Obamacare or overhaul the law.
"What's frustrating is that for years Republicans claimed they had a better alternative and convinced people that if they were elected they would come up with 'something terrific,' as Trump said. They demonstrated in the past six months that that was false," said Nicholas Bagley, a law professor at the University of Michigan Law School who supports Obamacare.
Trump could make it worse
While Trump is not the only factor causing rising premiums and insurer exits in Obamacare, the administrative authority the law allows him leverage to make a bad situation worse.
Democrats believe Trump is already undermining the exchanges, and have been blasting Trump's actions, or inactions, on Obamacare for months. They have called out his refusal to commit to authorizing cost-sharing reduction subsidies, for shortening the open enrollment period, for slashing outreach funds, and for handing decisions about regulations to Health and Human Services Secretary Tom Price, a longtime opponent of the law.
If the goal is to damage Obamacare, the fruit of the Trump administration's efforts are bearing out. Insurers have cited the uncertainty as one reason for leaving the health insurance exchanges and for plans to raise premiums by double digits or higher if they don't receive insurer payments. Next year, 2 million more people are projected to be uninsured because the cost of having insurance will rise for them, according to Congressional Budget Office estimates.
Turley, who was lead counsel for the House until its trial win over the cost-sharing reduction subsidies, warned lawmakers of Obamacare's reliance on the executive branch before the bill passed.
"I said that, despite my support for national healthcare, it was the worst legislative product that I had seen in my time in Washington to reach that stage of enactment," Turley said. "It was an unrefined, incomplete work that was muscled through Congress by the Obama administration on a marginal vote. We have been paying the costs for the decision since enactment with hundreds of changes and continued controversy over the underlying systems."
Now the authority that Obama had over the healthcare law has fallen to Trump. In some instances, such as those involving cost-sharing reduction payments, Trump has upheld actions by Obama that have been legally contested.
"The very tools that Obama used Donald Trump now has," said Blackman, who is also a constitutional law expert and associate professor of law at the South Texas College of Law. "He has the keys."
The reality of such leeway on regulations has not gone unnoticed by the new administration.
"There are 1,442 citations in #ACA where it says 'The Secretary shall...' or 'The Secretary may...' @HHSGov, we'll look at every single one," Price tweeted in March.
Trump can easily challenge the law through administrative action because Obamacare punts a bulk of its decision-making to the executive branch. He can also allow it to atrophy. Making Obamacare work well is demanding, Bagley said. It requires people within the Department of Health and Human Services to run a website, do outreach, check for premium eligibility, and many other tasks.
"If President Trump decides he doesn't want the ACA to work, he can change some of the rules that help it to function," he said. "He can also choose to administer it badly on a day-to-day basis."
Outside groups can bring pressure on the administration to implement Obamacare, including filing suit as Republicans and libertarians did against Obama. They also can raise concerns with members of Congress, who can hold hearings or enlist the Government Accountability Office to examine health agencies' practices.
"What's unusual about this is not the structure of the law or its various delegations," Bagley said. "What's surprising is the intensity of the political debate surrounding the implementation of an existing law. It's rare, almost unprecedented, to see the executive branch so avidly undermine the law of the land."
But Obamacare was passed with no Republican support, and the wounds of doing so, and of years of what Republicans consider to be executive overreach from Obama, are still playing out at various levels of government.
"It's difficult for supporters of the ACA to be told that we should have waited to take this step until GOP saw the light," Bagley said. "But it's true that the continual battles over health reform are partly a function of the fact that the ACA passed without any Republican votes."