This year has been a rocky one for the more than 169,000 Coloradans who receive health coverage through Connect for Health Colorado, including the roughly 37,000 local small business owners and solo entrepreneurs who depend on the marketplace for quality, affordable health insurance. Between dogged Republican attempts to repeal the Affordable Care Act without an adequate replacement plan, and President Donald Trump’s inability to commit to making federal payments that subsidize insurance for low-income individuals, the ACA marketplaces are less stable than they were just 12 months ago. Now more than ever, we need a bipartisan plan to improve the ACA, and fortunately lawmakers like Gov. John Hickenlooper have taken a first step in that direction.
“The current state of our individual market is unsustainable, and we can all agree this is a problem that needs to be fixed,” Hickenlooper and Ohio Gov. John Kasich said in a recent letter to congressional lawmakers. “Governors have already made restoring stability and affordability in this market a priority, and we look forward to partnering with you in this effort.”
Something must be done now to strengthen the health of marketplaces, particularly because President Trump refuses to guarantee the future of federal ACA cost-sharing subsidies, which are a pillar of the health system. Under the health care law, insurance companies receive payments from the federal government known as cost-sharing reduction subsidies that are used to lower the deductibles and co-pays of low-income enrollees. The Congressional Budget Office recently estimated that discontinuing these payments would cause insurance premiums to skyrocket by 20 percent next year and 25 percent by 2020. In addition to raising premiums, the CBO report finds ending the CSRs would actually increase the federal deficit by $194 billion because consumers would need additional tax credits to offset premiums and it would cause a million people to lose health insurance coverage.
Ending these subsidies would also likely result in a mass exodus from the individual market by insurance companies, meaning an unknown number of entrepreneurs would be unable to afford health coverage for themselves and their employees, while aspiring entrepreneurs would be unable to start a new business at all because they won’t be able to access affordable health coverage.
To end the politically-created uncertainty surrounding the ACA, Hickenlooper and Kasich wisely proposed continuing the CSR payments. They also called on Congress to establish a temporary fund states could use to create reinsurance programs that would reduce premiums, temporarily keeping the individual mandate in place and encouraging the federal government to offer robust health care education and outreach, which helps increase participation in the ACA.
Additionally, the Hickenlooper/Kasich plan calls on the federal government to bolster federal risk-sharing mechanisms, including risk adjustments and reinsurance to stabilize risk pools, and to maximize market participation by encouraging young people to obtain insurance.
While their plan is not perfect and lacks some specific details about how some of these proposals would work, it has many good ideas and would be a great start to the process of strengthening the ACA. There is much more, however, that should be done to bring greater stability to the ACA marketplaces. For example, the reinsurance program Hickenlooper and Kasich proposed should be made permanent because it would help stabilize premiums in the individual marketplaces by protecting insurers from big financial losses. What’s more, continuing Medicaid expansion would go a long way in states like Colorado, which already saw 100,000 people gain insurance through the growth of that program under the ACA. Additionally, we must provide more options for consumers in counties that have few participating insurers in the ACA marketplaces, for example by allowing them to purchase plans through the Federal Employee Health Benefits Program.
Now that efforts to repeal the ACA have stalled, Colorado’s small firms need President Trump and his allies to stop risking the health coverage of thousands of local small business owners and their employees, stop using health care as a political pawn, and stop undercutting the ACA. Entrepreneurship will not thrive without easily obtainable, quality health insurance, and the reality is that only federal lawmakers can take the steps needed to guarantee that this insurance coverage will remain available. Congress should follow Gov. Hickenlooper’s example and start making positive health care policy immediately — Colorado’s economy and more than a half-million small businesses depend on it.
Emily Dewey is the Colorado outreach manager for Small Business Majority.