Lawfully present immigrants help stabilise ACA plans

Bernard J. Wolfson, Tribune News Service

If you want to create a perfect storm at Covered California and other Affordable Care Act marketplaces, all you have to do is make enrolment more time-consuming, ratchet up the toll on consumers’ pocketbooks, and terminate financial aid for some of the youngest and healthiest enrollees. And presto: You’ve got people dropping coverage; rising costs; and a smaller, sicker group of enrollees, which translates to higher premiums. The Trump administration and congressional Republicans have just checked that achievement off their list. They have done it with the sprawling tax and spending law President Donald Trump signed on July 4 and a related set of new regulations released by the Centers for Medicare & Medicaid Services that will govern how the ACA marketplaces are run.

Among the many provisions, there’s this: Large numbers of lawfully present immigrants currently enrolled in Obamacare health plans will lose their subsidies and be forced to pay full fare or drop their coverage. Wait. What? I understand that proponents of the new policies think the government spends too much on taxpayer subsidies, especially those who believe the ACA marketplaces are rife with fraud. It makes sense that they would support toughening enrolment and eligibility procedures and even slashing subsidies. But taking coverage away from people who live here legally is not health care policy. It’s an echo of the federal immigration raids in Los Angeles and elsewhere.

“It’s creating a very hostile environment for them, especially after having to leave their countries because of some very traumatic experiences,” says Arturo Vargas Bustamante, a professor of health policy and management at UCLA’s Fielding School of Public Health. “For those who believe health care is a human right, this is like excluding that population from something that should be a given.”

In Covered California, 112,600 immigrants, or nearly 6% of total enrollees, stand to lose their federal tax subsidies when the policy takes effect in 2027, according to data provided by the exchange.

In the Massachusetts and Maryland marketplaces, the figure is closer to 14%, according to their directors, Audrey Morse Gasteier and Michele Eberle, respectively. It’s not clear exactly how much financial aid those immigrants currently receive in ACA marketplaces. But in Covered California, for example, the average for all subsidised enrollees is $561 per month, which covers 80% of the $698 average monthly premium per person. And immigrants, who tend to have lower-than-average incomes, are likely to get more of a subsidy.

The immigrants who will lose their subsidies include victims of human trafficking and domestic violence, as well as refugees with asylum or with some temporary protected status. And “Dreamers” will no longer be eligible for ACA marketplace health plans because they will not be considered lawfully present. Immigrants who are not in the country legally cannot get coverage through Covered California or most other ACA marketplaces. The nearly 540,000 Dreamers in the United States arrived in the US as kids without immigration papers and were granted temporary legal status by President Barack Obama in 2012. Of those, an estimated 11,000 have ACA health plans and would lose them, including 2,300 in Covered California.

Supporters of the policy changes enshrined in the CMS rule and budget law think it’s high time to rein in what they say are abuses in the system that started under the Biden administration with expanded tax credits and overly flexible enrollment policies. “It’s about making Obamacare lawful and implementing it as drafted rather than what Biden turned it into, which was a fraud and a waste-infused programme,” says Brian Blase, president of Arlington, Virginia-based Paragon Health Institute, which produces policy papers with a free-market bent and influenced the Republican-driven policies. But Blase doesn’t have much to say about the termination of Obamacare subsidies for lawfully present immigrants. He says Paragon has not focused much on that subject.

Jessica Altman, executive director of Covered California, expects most immigrants who lose subsidies will discontinue their enrolment. “If you look at where those populations fall on the income scale, the vast majority are not going to be able to afford the full cost of the premium to stay covered,” she says. Apart from the human hardship cited by Bustamante, the exodus of immigrants could compromise the financial stability of coverage for the rest of Covered California’s 1.9 million enrollees. That’s because immigrants tend to be younger than the average enrollee and use fewer medical resources, thus helping offset the costs of older and sicker people who are more expensive to cover.

Covered California data shows that immigrant enrollees targeted by the new federal policies pose significantly lower medical risk than US citizens. And a significantly higher percentage of immigrants in the exchange are ages 26 to 44, while 55- to 64-year-olds make up a smaller percentage. Still, it would be manageable if immigrants were the only younger people to leave the exchange. But that is unlikely to be the case. More red tape and higher out-of-pocket costs — especially if enhanced tax credits disappear — could lead a lot of young people to think twice about health insurance.

The covid-era enhanced tax credits, which have more than doubled ACA marketplace enrollment since their advent in 2021, are set to expire at the end of December without congressional action. And, so far, Republicans in Congress do not seem inclined to renew them. Ending them would reverse much of that enrollment gain by jacking up the amount consumers would have to spend on premiums out of their own pockets by an average of 66% at Covered California and more than 75% nationally. And an analysis by the Congressional Budget Office shows that a consequent exodus of younger, healthier people from the marketplaces would lead to even greater costs over time.

Enhanced tax credits aside, consumers face additional hurdles: The annual enrolment period for Covered California and other marketplaces will be shorter than it is now. Special enrolment periods for people with the lowest incomes will be effectively eliminated. So will automatic renewals, which have greatly simplified the process for a majority of enrollees at Covered California and some other marketplaces.

Enrollees will no longer be able to start subsidised coverage, as they can now, before all their information is fully verified. “Who are the people who are going to decide to go through hours and hours of onerous paperwork?” says Morse Gasteier. “They’re people who have chronic conditions. They have health care issues they need to manage. The folks we would expect not to wade through all that red tape would be the younger, healthier folks.”

California and 20 other states this month challenged some of that red tape in a federal lawsuit to stop provisions of the CMS rule that erect “unreasonable barriers to coverage.” California Attorney General Rob Bonta said he and his fellow attorneys general hoped for a court ruling before the rule takes effect on Aug.25.

“The Trump administration claims that their final rule will prevent fraud,” Bonta said. “It’s obvious what this is really about. It’s yet another political move to punish vulnerable communities by removing access to vital care and gutting the Affordable Care Act.”