Kirk Lyman-Barner’s phone began buzzing at 7:30 a.m. Friday and didn’t stop for hours.
An Americus insurance broker who specializes in Obamacare policies, Lyman-Barner is used to being a familiar face around town. But even his morning coffee run at Cafe Campesino was interrupted repeatedly by clients, all of whom were worried about how much their monthly health care premiums would increase due to the latest headlines coming out of Washington.
At 11 the night before, the Trump administration announced it would stop paying insurance companies to subsidize low-income customers on Obamacare’s individual markets. Lyman-Barner’s clients were terrified that subsequent premium increases would force them into catastrophic plans, juggling bills or dropping insurance coverage altogether.
“When you live in a small town, you know people’s stories. You know their illnesses and backgrounds and such, and it’s just tragic to think that they may not have access to care,” he said. “It is very confusing. People are scared.”
Lyman-Barner is one of countless insurers, regulators and customers in Georgia scrambling for answers after the White House announced it would halt the so-called cost-share reduction payments.
About 380,000 Georgians benefit from the subsidies, which are designed to make Obamacare insurance affordable.
The news wasn't exactly a surprise. President Donald Trump for months mused publicly about cutting off the subsidies, which he described as an insurance company "bailout" that was propping up a "failing" health care law.
So the four insurance companies operating on Georgia’s Obamacare exchanges hedged.
All four — Alliant, Ambetter, Blue Cross Blue Shield and Kaiser Permanente — filed two sets of proposed 2018 rate increases last month with the state Department of Insurance. One set assumed the Trump administration would renew the subsidies and, hence, proposed lower increases.
The other accounted for more Washington uncertainty, baking the policy ambiguity in the price. Each of the four companies proposed raising monthly premiums more than 50 percent above this year’s levels under that scenario. And in the end, when the companies had to choose between the two for their final number, most chose that higher one.
For them to choose a different rate now would require an amendment from the U.S. Department of Health and Human Services, according to the state.
Kaiser Permanente was the only one of the four companies to name the lower number as its final increase, however, going with 2018 rates that would be 30.6 percent higher. Although Kaiser did prepare the second business plan accounting for subsidy threats with a higher increase, it was not clear Friday that that one would go into effect. The increase in that case was to be 56.7 percent.
Jim Driscoll, a spokesman for Kaiser, which covers metro Atlanta, said the company intended to stay in the exchange market but was evaluating the situation.
In any case, there is no dispute among insurers that the events in Washington have pushed customers’ costs higher.
“These are trying times to be in the fortuneteller business, but to the best of our abilities our plans have accounted for this,” said Graham Thompson, a lobbyist for Georgia insurers. “To offer that robust coverage, people are going to see higher rates for 2018 as they’re shopping on the exchange.”
‘Piece by piece’
Trump was able to unilaterally cut off the subsidy payments because of a lawsuit congressional Republicans filed against then-President Barack Obama in 2014. A federal court had ruled in favor of the GOP’s argument that Congress had not given the executive branch permission to pay the subsidies, and Obama had pursued a legal challenge to the initial ruling. Trump ended the payments by dropping his predecessor’s appeal.
“The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system,” White House Press Secretary Sarah Huckabee Sanders said. “Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people.”
After Republicans in Congress failed to agree on a strategy for repealing and replacing Obamacare, Trump said he wanted to let the health care law collapse under its own weight. Earlier on Thursday, he indicated he would help dismantle it by signing an executive order to bolster through incentives the use of short-term health plans, which are cheaper and subject to fewer Obamacare rules, and so-called associated health plans that can be sold across state lines. Hours later came the subsidy decision.
“ObamaCare is a broken mess,” Trump tweeted on Friday morning. “Piece by piece we will now begin the process of giving America the great HealthCare it deserves!”
Lyman-Barner said consumers won’t know exactly how much rates on the Obamacare exchanges will increase until open enrollment for 2018 begins on Nov. 1.
Trump’s decision does not outright kill the help for lower-income customers, since the 2010 health care law requires insurance companies to provide affordable coverage to people with low incomes. What his Thursday move did was end the money the federal government paid to reimburse those insurers.
In other words, insurers will still need to subsidize things such as deductibles and co-pays for low-income people. They just won’t get paid back by the feds.
In return, insurance companies are expected to raise premiums on their other customers on the exchanges in order to recapture their financial losses.
In addition, federal tax credits tied to lower-income customers’ premiums will rise as the premiums rise, so that will also help those customers. Unfortunately, it will also increase the federal deficit. So the change is estimated to leave U.S. taxpayers with a $194 billion increase in the deficit over the first 10 years, according to the nonpartisan Congressional Budget Office.
And those who have individual plans but have incomes too high to qualify for help will see the wallop to their bank accounts.
Patient advocates in Georgia are deeply concerned for middle-income customers — single people making more than $48,000 or a family of four earning more than $99,000. They would have to pay in full.
“The result of this effort will be to create mistrust with the carriers, force many folks who don’t get subsidies to drop (Affordable Care Act) qualified plans and let Congress answer to its constituents who are priced out of health insurance,” Lyman-Barner wrote.
Further, more premium increases could be in line for 2019 as Georgia insurers prepare for the next round of insurance adjustments.
Division on Capitol Hill
At least 18 states’ attorneys general announced they would sue to keep the subsidies going.
In the meantime, more pressure now shifts to Congress to act on health care. Republicans are still internally divided over what should replace the 2010 health law, and Democrats refuse to make any major changes to Obamacare. Bipartisan negotiations to stabilize Obamacare's markets have been left on the back burner.
It’s possible those talks, which aimed to trade continued insurance subsidies for more state flexibility on insurance requirements, could be revived, but it’s unclear whether Trump would sign such a compromise to keep Obamacare afloat.
The two parties on Friday appeared as divided as ever.
Democratic U.S. Rep. John Lewis of Atlanta called Trump’s move to end the subsidies “mean-spirited.”
He said the two parties should come together to work out a solution, but he also said conditions might not improve until Democrats retake control of Congress.
“People are going to suffer, are going to feel the pain of what is happening,” he said in an interview. “We’re going to assure them that if we take back the majority, we will fix it.”
Democrats are not the only ones to try to address the subsidy problem. Republican U.S. Sen. Lamar Alexander of Tennessee convened bipartisan hearings on the issue in September. But too many of his fellow Republicans ditched his effort to focus one last time on trying to repeal Obamacare.
Trump was optimistic, however, when he addressed his action on the subsidies in an early-morning tweet Friday. He suggested it would lure Democrats to his side and build the necessary votes from them and enough Republicans to form a majority for a solution.
“The Democrats ObamaCare is imploding,” the president tweeted. “Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!”