President Donald Trump spooked health insurance investors Saturday by proposing in a Truth Social post — in response to the current fight in Congress over federal health insurance premium subsidies — that the government should send health insurance subsidies straight to consumers, rather than to health insurers.
Trump posted the following:
“I am recommending to Senate Republicans that the Hundreds of Billions of Dollars currently being sent to money sucking Insurance Companies in order to save the bad Healthcare provided by ObamaCare, BE SENT DIRECTLY TO THE PEOPLE SO THAT THEY CAN PURCHASE THEIR OWN, MUCH BETTER, HEALTHCARE, and have money left over. In other words, take from the BIG, BAD Insurance Companies, give it to the people, and terminate, per Dollar spent, the worst Healthcare anywhere in the World, ObamaCare. Unrelated, we must still terminate the Filibuster!”
At press time, around 1 p.m. Eastern time, the shares of six big, publicly traded health insurers now in the commercial health insurance market were lower than they prices were when the stock market closed on Friday.
The decreases ranged from 0.89%, for UnitedHealth’s stock, to 15.69%, for Oscar Health.
The drops were 2.48% for Cigna; 1.76% for CVS Health, the parent of Aetna; 3.68% for Elevance Health, the parent of Anthem Blue Cross; and 7.32% for Centene.
The backdrop: Democrats have been attacking the Trump Administration and Republicans in Congress in recent months over some Republicans’ resistance to renewing the current level of premium subsidies for coverage purchased through HealthCare.gov or other Affordable Care Act public exchange programs, such as Covered California.
For many current enrollees, returning to the lower subsidy levels in place before the start of the COVID-19 pandemic could mean that their share of the monthly premiums will suddenly double or trouble.
For some enrollees near the pre-COVID ACA subsidy access income cutoff — 400% of the federal poverty level — returning to the old subsidy rules could mean that their monthly coverage costs will jump to more than $500 per month, from less than $100 per month today.
This month, Republicans have been starting to counter the Democrats with arguments that the Affordable Care Act has created a complicated system in which deductibles are high, provider networks are narrow, and the underlying cost of coverage is soaring, in part because of ACA benefits mandates and other ACA benefits design rules.
Before 2010, when the current Affordable Care Act system started to come to life, many Republicans backed efforts to reform the U.S. health finance system by sending cash straight to consumers, possibly through accounts resembling health savings accounts, and letting the consumers decide how to use the cash.
Since 2010, Republicans have backed away from some of the most brutal fights over the ACA benefits design rules, in part because of concerns about the difficulty of making individual major medical health insurance available without medical underwriting.
Some health insurers, health policymakers and health insurance math experts have argued that the government must provide subsidies, set product design and enrollment standards, and provide some protection against competition from similar, less tightly regulated products if it wants private insurers to offer major medical coverage without rejecting high-risk applicants and without charging high-risk enrollees more for their coverage.
What it means for employers: It’s not clear whether Trump’s Truth Social post will lead to formal regulatory or legislative action, what the formal proposals would look like, or whether any proposals would succeed.
If Trump’s post leads to a revival of the old cash-for-coverage efforts, that could help the companies that now administer health savings accounts, health reimbursement arrangements and flexible spending arrangements, by dramatically expanding the number of consumers with health accounts.
But providers of the current employer cash-for-coverage arrangements, such as individual coverage health reimbursement arrangements and qualified small employer HRAs, could suffer if the new strategy hurts health insurers’ ability to offer individual major medical coverage without use of medical underwriting.
This morning, investors seemed to think that health account providers will propser and ICHRA providers will suffer. At press time, the price of shares of HealthEquity, an HSA provider, was $98.81, or 5.44% higher than the price investors were paying at the end of the day on Friday.