Health insurers' next scare comes tomorrow
(Bloomberg) -- The health insurance industry’s Obamacare drama reached a climax on Tuesday, but it isn’t over.
With Senate Republicans’ failure to advance their bill to replace Obamacare, insurers are facing a summer of uncertainty. President Donald Trump’s administration won’t commit to making critical payments under Obamacare. Health plans have pulled out of some markets, and raised rates in others. And there’s always the chance that Republicans could revive their effort to repeal the law.
“Our members and all Americans need the certainty and security of knowing coverage will be available and affordable for them,” said Justine Handelman, senior vice president of policy and representation for the Blue Cross Blue Shield Association.
The next key moment comes tomorrow. That’s the date when the administration -- which has threatened to let Obamacare fail -- is scheduled to make its next monthly subsidy payment to insurers under the ACA. Known as cost-sharing reduction payments, the subsidies were created by Obamacare to help low-income people afford to use medical services, and their legitimacy is the subject of a legal dispute.
So far, the White House -- which has threatened to halt the subsidies in the past -- hasn’t committed to making the payment.
“Of course it’s always an option” not to make the payment, said Sean Spicer, the White House press secretary. “We have a couple days left.”
The Blue Cross Blue Shield Association said it has “consistently urged that there be immediate, certain funding for the cost-sharing reduction program.” The insurers that sell under the brand collectively cover more than 100 million people in the U.S.
Read More: Failing or Fine? How Obamacare’s Markets Are Shaping Up
For some insurers, the best way to deal with the uncertainty around Obamacare has been to back away from it.
On Tuesday, UnitedHealth Group Inc., the U.S.’s biggest insurer, 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.
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. Trump has many powers at his command to undermine them further. And there’s no map and no timeline by which lawmakers might find a resolution.
‘No Clear Path’
“There is no clear path out of this,” said Robert Laszewski, an insurance industry consultant who has been 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.”
Humana Inc. and Aetna Inc. have retreated from the law, 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 as a reason for their pullback.
The next step in Congress is 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 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.”
Kristine Grow, a spokeswoman for America’s Health Insurance Plans, another lobbying group for insurers, declined to comment directly on Trump’s 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.
A third insurance group, the Association for Community Affiliated Plans, said it also wanted lawmakers to try and stabilize the ACA. “We believe there are a number of fixes needed to stabilize the individual market, such as guaranteeing funding for cost-sharing reductions and ensuring that coverage is truly affordable for consumers,” said Margaret Murray, the group’s chief executive officer.