WASHINGTON – New York's Essential Plan – which offers low- cost health insurance to more than 19,000 people in metro Buffalo and more than 665,000 statewide – faces a grave future thanks to President Trump's late-night move to stop paying Obamacare insurers their federal subsidies starting next Wednesday.
Trump's executive order aiming to restructure the market for people who buy insurance on their own also may eventually lead to higher insurance prices for those who work for small companies.
Those were the conclusions that local health insurance experts reached Friday after Trump's double-barreled attempt to undo Obamacare on his own after Congress failed to do so.
Trump's key move came late Thursday, when his administration announced that it was immediately ending subsidies that insurance companies and New York State receive to help pay for health care for lower- and middle-income people buying insurance on their own.
But health experts say his other move -- an order to rewrite government rules to open up the market to a host of low-cost, low-benefit plans not available under Obamacare -- will have a dramatic long-term impact, too.
Together the two moves will give insurers reason to leave the exchanges set up under Obamacare, said Dr. Nancy H. Nielsen, a former president of the American Medical Association who teaches at the University at Buffalo School of Medicine and Biomedical Sciences.
"I can't believe he wants to blow up the exchanges and throw the people who participate in them into immediate chaos," Nielsen said.
Most importantly for New York, Trump's decision to end those Obamacare subsidies is expected to eliminate a quarter of the Essential Plan's funding, or about $925 million a year. That would force the state to either boost its own subsidies to allow people to continue their current insurance, raise rates or do away with the Essential Plan entirely.
Much depends on decisions yet to be made by Gov. Andrew M. Cuomo and his health care team. And in a statement issued Friday, Cuomo offered no hint of what he would do, except to join states suing the Trump administration to try to force it to reverse its decision
"We will not stand silently by as the federal government tries to take away health care from New Yorkers," Cuomo said. "As President Trump executes on his mission to strip health care protection from those who need it most, we stand ready to join states across the nation to sue the federal government. We will not go backwards."
Health care officials in New York state said Trump's move will not affect the vast number of people who get their health insurance through large employers.
But for for the 19,00o people on the Essential Plan in Erie and Niagara counties – and for Cuomo – Trump's move could be devastating.
"I don't know how long the state can sustain the Essential Plan without its monthly payment from Washington," said Bill Hammond, director of health policy for the right-leaning Empire Center think tank in Albany. "This looks to me like a fatal blow."
Discussing his decision with reporters on Friday, though, Trump defended the move as a way of restarting congressional negotiations on repealing and replacing Obamacare.
"What it's going to do is it's going to be time to negotiate healthcare that's going to be good for everybody," Trump said.
Dismissing the subsidies as giveaways to highly profitable insurers, Trump added: "Now, if the Democrats were smart, what they'd do is come and negotiate something where people could really get the kind of healthcare that they deserve, being citizens of our great country."
Democrats indicated that restoring those subsidies to insurers was something that Republicans in Congress should agree to do. Otherwise, the GOP will be blamed for the consequences of Trump's actions, said Senate Minority Leader Charles E. Schumer, a New York Democrat.
"Unless our Republican colleagues act, the American people will know exactly where to place the blame when their premiums shoot up and when millions lose coverage," Schumer said.
Rep. Tom Reed, a Corning Republican who co-chairs a "Problem Solvers Caucus" that has been trying to come up with a legislative fix to fund those health care subsidies, said he would continue working to do just that.
“The president has taken the first steps to repealing and replacing Obamacare, a promise he made the American people," Reed said. "Now Congress must act immediately to help stabilize the insurance market and help lower premiums for Americans.
A federal court ruled that Congress must authorize those subsidies to insurers, but both the Obama and Trump administrations had continued to pay them anyway, because not paying them would undermine the insurance for 7 million Americans.
Now, though, those private insurance plans will start running short on funds when their subsidies -- called "cost-sharing reductions" -- disappear Oct. 18.
In most states, that will blow holes through the budgets of private insurers. But New York was one of the few states to create its own "Essential Plan" to serve people who don't qualify for Medicaid and have to buy health plans on their own.
The Essential Plan has proved to be hugely popular in New York. And State Attorney General Eric Schneiderman said he would go to court to try to preserve the federal subsidies that make it possible.
"I will not allow President Trump to once again use New York families as political pawns in his dangerous, partisan campaign to eviscerate the Affordable Care Act at any cost," Schneiderman said.
Another part of Trump's plan came in his executive order earlier Thursday, which instructed federal agencies to draw up new rules to allow a host of new insurance policies to come onto the market.
Trump's order encourages the development of "association health plans," in which local chambers of commerce or other groups could come together to offer policies to their members.
Those plans could offer far fewer benefits than are mandated under Obamacare, meaning they would come at a far lower cost.
And since they would be available for small businesses as well as individuals, their impact could extend beyond the individual market.
Those plans could pull the young and healthy away from the traditional, more comprehensive small-group plans offered by companies that employ fewer than 100 people, said Donald R. Ingalls, vice president for government relations at BlueCross BlueShield of Western New York.
And that, Ingalls said, could lead to higher rates for those remaining in such small-group plans starting in 2019, once all the changes have had time to take effect.
In addition, Trump's order will allow the sale of short-term insurance plans that don't cover pre-existing conditions, mental health services and other important benefits that are covered under Obamacare, said Bea Grause, president of the Healthcare Association of New York.
"As a result, out-of-state companies offering products with less coverage and fewer consumer protections will undercut New York-regulated insurance companies providing comprehensive coverage mandated by state law," Grause said. "This approach will almost certainly serve to destabilize the insurance market in New York and lead to unaffordable coverage for the people who need it most."