Doomed healthcare bill leaves insurers in limbo

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(Bloomberg) -- UnitedHealth Group Inc., the U.S.’s largest insurer, knew how to play Obamacare: it stopped participating in the law.

But few health insurers, hospitals or doctors seem to know how to approach the next chapter in American health care now that Republican efforts to dismantle the Affordable Care Act have all but collapsed.

With Republicans in Congress reeling Tuesday from the failure of their latest Obamacare repeal effort, the health care industry is facing an accumulation of “ifs.” Obamacare’s insurance markets still have problems, with insurers pulling out of some areas and raising premiums in others. President Donald Trump has many powers at his command to undermine them further -- and has threatened to do so. And there’s no map and no timeline by which lawmakers might find a resolution.

“There is no clear path out of this,” said Robert Laszewski, an insurance industry consultant who’s critical of Obamacare. “Individual markets continue to spiral downward partly because of the inherent issues in Obamacare’s market architecture and partly because of Republican efforts to make things even worse.”

The consequences of that uncertainty are already showing in the ACA’s individual markets. Insurers have pulled out of some areas and are boosting premiums in others, meaning consumers in some regions will face fewer options and higher prices next year. In a few parts of the country, there are currently no Obamacare insurers at all.

Political Minefield

On Tuesday, UnitedHealth showed the benefits of avoiding the political minefield the law has become. It reported second-quarter profit that beat estimates and raised its 2017 forecast after turning its business away from the ACA’s individual markets and more toward Medicare, Medicaid and coverage sold to employers.

Humana Inc. and Aetna Inc. have also retreated, and Anthem Inc., a key Obamacare player, has announced plans to quit or limit its presence in at least four states. The industry has cited the volatile politics around Obamacare, through which the government provides subsidies to help people buy coverage, as a reason for their pullback.

Insurers’ skittishness likely won’t be calmed by the current administration. Trump’s government has raised doubts about how it will enforce a tax penalty under the ACA meant to make people buy insurance. It’s threatened to withhold payments that help poorer people use the plans they buy. And it’s an open question how Trump’s health department will promote Obamacare when 2018 sign-ups start in November.

The GOP bill’s failure may hold a silver lining for hospitals, which had worried about whether patients would lose insurance coverage, leading to more unpaid bills. The repeal bill would have slashed funding for Medicaid and reduced Obamacare’s subsidies, leading to about 22 million more people going uninsured in a decade.

The BI North America Hospitals Valuation Peer Group fell less than 1 percent on Tuesday. The Standard and Poor’s 500 Managed Health Care Index of insurance stocks was down 1.1 percent.

Next MovesThe next step in Washington is now unclear. Senate Majority Leader Mitch McConnell proposed holding a vote to repeal Obamacare without a replacement plan, on a two-year delay. But enough GOP Senators quickly said they opposed that plan to effectively kill it.

Meanwhile, Trump expressed support for a plan sure to dismay hospitals and insurers.

“We’ll let Obamacare fail and then the Democrats are going to come to us,” Trump said Tuesday at the White House. “We’re probably in that position where we’ll let Obamacare fail. We’re not going to own it. I’m not going to own it. I can tell you the Republicans are not going to own it.”

The health-care industry will likely go into a period of limbo as lawmakers move to other priorities. It will also open the door to lobbying groups to influence any future health-care effort.

“The health reform debate is by no means over,” said David Barbe, president of the American Medical Association, the largest trade group of doctors in the U.S. “The status quo is unacceptable.”

Payment Deadline

The next deadline comes this week, when the Trump administration has to decide whether to keep paying what are known as cost-sharing subsidies. The subsidies help low-income people afford co-payments and cost-sharing on medical services, and their legitimacy is the subject of a legal dispute. The Trump administration has threatened to stop making them.

“Let ObamaCare fail and then come together and do a great healthcare plan. Stay tuned!” Trump tweeted Tuesday morning, hours after two conservative Republican senators said they wouldn’t vote for the GOP bill.

“We are still considering our options,” Ninio Fetalvo, a White House spokesman, said in an email. Representatives for HHS didn’t immediately respond to requests for comment.

Kristine Grow, a spokeswoman for America’s Health Insurance Plans, a lobbying group for insurers, declined to comment directly on Trump’s tweeted threats. “We remain committed to working with every policy maker and the administration to ensure the short-term stability and long-term improvement of health care,” she said.

They may be waiting for a while, said Sheryl Skolnick, an analyst at Mizuho Securities.

“This morass of uncertainty could go on for a very long time,” Skolnick said.

Bloomberg News