CMS’ plan to ‘wind down’ federal exchanges by 2020 relies on a big ask from Congress

The Centers for Medicare & Medicaid Services (CMS) plans to “wind down” support for the federal exchanges by the time open enrollment hits in 2019 and shift funding to states.

For that strategy to work, the agency is relying on Congress to do something it failed to do several times last year: Pass an ACA repeal.

CMS detailed its plan in a fiscal year 2019 budget justification (PDF) released this week that outlines a $403 million cut to its program operations budget next year. With less funding to oversee the federal exchanges for plan year 2020, CMS would dole out grants that allow states to “assume more control of their markets and expand enrollment options.”

“The FY 2019 Budget assumes passage of legislation to repeal and replace Obamacare, which would phase down the Federal Exchanges as the new Market-Based Health Care grants become available in plan year 2020,” the document states.

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According to a White House budget blueprint (PDF) released in February, which also assumes passage of legislation modeled after the Graham-Cassidy-Heller-Johnson bill, $146 billion in funding would be diverted to the grant program.

The Trump administration’s contempt for the ACA is no secret, and health officials have openly lobbied for a full repeal. In written testimony (PDF) to the House Committee on Ways and Means in February, Secretary Alex Azar said the grant program proposed under the Graham-Cassidy-Heller-Johnson bill “will help states stabilize their insurance market and provide for a smooth transition away from Obamacare.”

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The CMS document is yet another indication the Trump administration has not given up on a full ACA repeal. But it also comes at a time when CMS Administrator Seema Verma praised the agency for the “most cost-effective and successful open enrollment to date." Statistics released by the agency this week showed that 11.8 million people signed up for ACA plans during the last open enrollment period, including 8.7 million who signed up through

CMS’ plan minimizes the “incredibly important role” the federal exchange plays in national enrollment, in terms of outreach, education and improving user experience and customer support at a large scale, according to Josh Peck, co-founder of Get America Covered and former chief marketing officer of under President Barack Obama.

While the impact of phasing out the federal marketplace would be more muted for states like California with a robust state exchange, states like Texas and Florida are likely to see a far bigger impact.

“If shuts down, that will be tremendously confusing to people across the country,” Peck says, adding that consumers are often redirected to state exchanges through the federal site.

At the same time, an ACA repeal appears to be a long shot after multiple failed attempts last year. Repeal legislation was not included in the recently passed Bipartisan Budget Act, and Senate Majority Leader Mitch McConnell, R-Ky., signaled at the end of the year that he was ready to move on from repeal efforts. Ultimately, it adds more pressure to the midterm elections, which could have an impact on whether Congress revives repeal efforts once more.