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A Wild Week in Health Policy

Efforts to repeal and replace the Affordable Care Act (ACA) moved from Congress to the Oval Office this week, and they could spell big changes for Colorado’s insurance market and higher prices for many Coloradans.

After several attempts to overturn the ACA through legislation failed, the Trump Administration is turning to regulatory efforts to chip away at its provisions. President Donald Trump signed an executive order Thursday morning that would let small businesses join together to form associations and offer insurance coverage, including plans that could have fewer benefits than those offered under the ACA. And on Thursday evening, he announced plans to drop ACA-created subsidies (called cost sharing reductions) to health insurers that help pay out-of-pocket costs for low-income customers.

The executive order must go through an established rule-making process, so it’s not in place just yet. And Trump's decision to halt the subsidies, which have been controversial, may be stymied by lawsuits or lead to Congressional action.

But there are many reasons to watch what is happening in Washington with concern, especially for the 435,000 or so Coloradans who buy their health insurance through the individual marketplace instead of through an employer or a public program such as Medicare or Medicaid.

Without the subsidies, insurers have indicated that they will need to decide whether to raise prices to cover their costs or leave the ACA exchanges altogether. Either action would strike at the heart of the ACA’s effort to ensure that all Americans have access to affordable and high-quality health insurance and undermine the stability of the insurance marketplaces.

It’s possible some people could see lower prices, especially if they are able to buy cheaper plans with fewer benefits through the associations.

But the real prospect of higher prices for others is daunting. Many individual market consumers in Colorado are already struggling with their premium rates, often finding it outright unaffordable to buy coverage. Colorado’s Division of Insurance announced in July that prices for 2018 insurance policies would rise an average of 27 percent across the state. But that increase, already the greatest on Colorado's individual market since the ACA took effect in 2014, assumed that the cost-sharing reductions would be in place.

Taking away the subsidies would add six percentage points to the expected increase, bringing the statewide average hike to 33 percent in 2018, the insurance division said Friday.

The 435,000 Coloradans who buy their insurance through the individual market represent about eight percent of the state’s population. Roughly 43 percent of them purchase their coverage through Connect for Health Colorado, the state-based insurance exchange.

Many of these customers are eligible for tax credits to offset the cost of their premiums because they have low annual incomes. In fact, Connect for Health Colorado says that Coloradans saved $318 million off their 2016 premiums with the tax credits. And about 45,000 of them also receive help with their out-of-pocket costs through the subsidies that Trump plans to cut. (They would continue to get that financial support from insurers, even though the insurers would not be reimbursed, leading to the expectation of higher prices.)

It’s the roughly 248,000 Coloradans on the individual market who don’t buy through the exchange — meaning they don’t receive tax credits or cost-sharing reductions — who may be most immediately vulnerable to higher prices if the cost sharing subsidies do go away. They will face the full impact of any increases without financial assistance.

Some experts expect the Trump Administration’s next move will be to loosen enforcement of the individual mandate, a key provision in ensuring that healthy people buy insurance as well as the unhealthy.

As we near the end of this week, one thing is clear: any hopes for stability in the insurance markets are evaporating.