- Republicans’ plan to repeal and replace Obamacare has created uncertainty around the law’s individual heathcare exchanges.
- Insurers are considering not offering plans on the exchanges in 2018 because of the unclear future.
- If insurers pull out of the exchanges because of the uncertainty, it could cause the “death spiral” Republicans have been talking about for years.
The Republican plan to repeal and replace the Affordable Care Act (ACA), better known as Obamacare, has introduced a high level of uncertainty into the health insurance market and the CEOs of major insurers are concerned about the future.
Over the past few weeks, a number of insurance executives have expressed concern and uncertainty about their business strategy regarding the ACA’s individual insurance exchanges.
The exchanges, where people not covered through their employer or Medicaid/Medicare can buy insurance, are one of the key parts of the ACA being target by the GOP’s repeal strategy.
Given that Republican lawmakers are still in the midst of a repeal of the law and have not laid out a cohesive plan for replacement, insurance executives are taking a cautious look into the future.
Insurers are nervous
“We have no intention of being in the market for 2018,” said Aetna CEO Mark Bertolini during his company’s earnings call on Tuesday. “Currently, where we stand, we’d have to have markets worked up … prices worked up for April 2017 to apply, and there is no possible way that we’ll be able to do that given the unclear nature [of where] that regulation is headed.”
Insurers must submit plans, including premium prices, to federal and state regulators for the 2018 plan year in April of this year.
Given the short turnaround time, it may be even harder to get insurers to commit to offering plans on the exchanges in 2018.
Anthem CEO Joseph Swedish echoed similar uncertainties during his company’s earnings call on Wednesday despite the fact that the company expects its ACA plans to be “break-even to slightly profitable in 2017.”
“While the direction in Washington has been positive, we still need certainty about short-term fixes in order to determine the extent of our participation in the individual market in 2018,” said Swedish.
A number of high profile insurers, including Aetna, UnitedHealth Group, Cigna, and Humana — four of the five large public insurers — decreased their exposure to the ACA exchanges in 2017 due to financial losses.
Despite the already declining insurer participation, it seems that the uncertainty created by the repeal has only hastened the abandonment of the exchanges.
Even insurers that have been profitable on the exchanges are talking about leaving because of the repeal plan.
Mario Molina, CEO of Molina Healthcare, told Politico’s Victoria Colliver that despite being successful on the exchanges, his company may not stick with the ACA if they continue to lack clarity on the future.
“People keep asking me, ‘Are you going to stay in?'” Molina told Politico. “I don’t know. It’s kind of like asking whether you’re going to buy a car in 2018. I’m not going to commit to something when I don’t know what the product looks like.”
In a testimony before the Senate on Wednesday, Marilyn Tavenner, the CEO of the leading health insurance lobby group America’s Health Insurance Plans and former head of the Centres of Medicare and Medicaid Services, told lawmakers that quick action is needed for insurers to be able to make 2018 work.
“Right now, plans are trying to price for ’18, and the uncertainty around cost-sharing subsidies and the tax credits would cause them to hesitate to price because we need to understand what the funding support is going to be, because that affects premiums,” said Tavenner.
Tavenner also noted that the companies “need predictability for long periods of time” in order to offer effective plans.
Creating a “death spiral”
Republicans have long maintained that the law is collapsing on its own and is in a “death spiral” due to insurers’ losses and declining numbers of insurers participating, eventually leading to lower consumer enrollment.
The nonpartisan Congressional Budget Office, however projected that enrollment and costs would stabilise over the nest 10 years. With insurers pulling out, however, health policy experts have said the uncertainty could end up creating the “death spiral” that the GOP has long feared.
President Donald Trump has expressed a desire to get a replacement plan in place quickly, which may mitigate some of the uncertainty and minimise disruptions in the individual health insurance markets. He also has reiterated that he doesn’t want the exchanges to collapse and leave people with higher costs or no coverage even though Democrats would “own it.”