How the Trump administration is spending millions to shore up Obamacare
President Donald Trump has threatened to blow up Obamacare. But his own administration is separately dangling hundreds of millions of dollars before states to bail out their insurance markets.

The White House said Thursday it applauds the stabilization efforts even as Trump steps up the pressure on the Senate to resume efforts to try to pass legislation to repeal and replace Obamacare.

“We support the Secretary’s efforts to give states flexibility to create solutions to relieve the burden of Obamacare that has skyrocketed premiums and reduced coverage choices for the American people,” said a spokesman.

The Alaska waiver, drawn up late in the Obama administration in one of the reddest states in the country, was approved this summer under Trump’s HHS secretary, Tom Price.

State officials pioneered the idea of a stabilization fund when the only insurer in the state’s Obamacare market threatened to raise premiums by more than 40 percent or quit altogether because it was spending more money on sick people’s medical bills than it received from premiums.

A bill passed last year by the heavily GOP state legislature set up a $55 million state program, funded through an existing tax on insurers, to reimburse insurers for high-cost enrollees.

State officials went on to win federal funding this summer from the Trump administration through a provision of Obamacare that lets states develop their own health plans as long as they meet certain criteria, such as covering the same number of people and not adding to the deficit.

“The Alaska example was a microcosm for what could be a successful program,” said Sen. Dan Sullivan (R-Alaska), noting that 2018 average premiums in that state are set to fall for the first time in five years even though his state has among the highest health costs in the country.

That program is likely to take on renewed importance now that GOP repeal efforts have foundered and more states undertake efforts to fix their insurance markets in the face of double-digit premium increases and declining insurer participation. The roots of those problems include GOP moves to undermine the law in ways that hit insurers’ bottom lines and Democratic overconfidence in the number of young and healthy people who would sign up for coverage.

Citing the Alaska model, Price encouraged states in March to stabilize their markets by channeling state and federal money to insurers to offset the costs of treating the most expensive patients — not unlike other risk-reduction programs built into the Affordable Care Act that conservatives derisively called “bailouts.”

Four other states — Oklahoma, Oregon, Minnesota and Iowa — now have waiver applications in the pipeline as a way to keep insurers in their markets and limit premium increases.

In addition, New Hampshire and Maine are considering similar programs.

“I think it is a recognition by many Republican policymakers … that some market stabilization programs can be a good thing,” said Aviva Aron-Dine, a former top Obama HHS official now with the left-leaning Center on Budget and Policy Priorities.

The state officials seeking approval for stabilization plans for 2018 — among them, Obamacare critics and supporters — are unified by their pragmatic approach.

“It’s not a political issue anymore,” said Lanhee Chen, a Republican health care adviser at the Hoover Institute who is a proponent of using Obamacare waivers to let states better tailor the health care law to fit their own needs.

“At least for the intermediate term, as many Republicans have said, Obamacare is probably going to be the law,” Chen added. “The administration has to figure out what its posture is.”

A handful of senators and a few dozen House members have also started discussions on a bipartisan national Obamacare fix, but it’s too soon to know whether legislation will come together this fall. But even Republicans in Congress who are wary of that effort support greater state flexibility — a hallmark of Price’s philosophy.

“There could be far greater flexibility for states to pursue innovative solutions,” said Sen. Ted Cruz (R-Texas), one of the Hill’s most determined Obamacare critics. But he’s made it clear his top priority is taking steps to lower premiums, not having Congress spend more money on insurers to stabilize Obamacare markets.

“As a component in a repeal of Obamacare and an expansion of consumer choices and competition, those stabilization funds have an appropriate place,” Cruz explained. “As a standalone, that’s the wrong solution.”

Other Republicans who praise Alaska’s approach favor making it simpler for other states to enact plans to bring down premiums.

“The waiver authorities already provided for in the ACA law, they were never really granted. They were never really used,” said Wisconsin Sen. Ron Johnson, another critic of Obamacare who is open to state-initiated fixes. “So that might be one of those reforms that we could be looking for.”

Even blue states like Oregon that embraced the health law are seeking ways to prevent unsustainable price increases.

“It was a total no-brainer for us,” said Jake Sunderland, of Oregon’s Department of Consumer and Business Services, which drafted a reinsurance program and estimates the state would receive $30 million a year in federal funds.

Oregon still has a competitive marketplace, but the state has seen insurers leave the market or scale back where they offer plans, in part because Obamacare patients were sicker than expected.

Average premium increases on Oregon’s individual market have topped 20 percent in each of the past two years, according to state regulators. Though seven insurers are expected to sell Obamacare-compliant plans in the individual market in 2018, state officials said they want to intervene now to prevent a mass defection of insurers.

“The reason why a year ago we started exploring how to stabilize the market is because we didn’t want to get to that point,” Sunderland said.

Minnesota found itself in a similar spot. The state saw competition among insurers decline, and health plans capped enrollment. The state, which committed roughly $540 million over two years to fund its reinsurance program, is asking HHS to provide between $138 million and $167 million for 2018.

State officials said the federal government has sent positive signals about the plan, which was the second to be submitted, behind Alaska’s. Oklahoma and Iowa are preparing to submit theirs to HHS in the coming weeks.

“I am not a big fan of the Affordable Care Act and the mandate,” said state Rep. Joe Hoppe, a Republican who sponsored the Minnesota legislation. “But we need to have a safety net for people.”