Slow, Painful Obamacare Demise Puts Health Insurers in Limbo

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Obamacare looks like it’s going away. Until that happens, big health insurers aren’t sure what to do with it.

Republicans and President Donald Trump haven’t given details on how they’ll repeal and replace the Affordable Care Act. Uncertainty about the law, which covers millions of Americans, has left companies trying to figure out if they’re better off stuck in limbo or just quitting entirely.

Aetna Inc. Chief Executive Officer Mark Bertolini warned Tuesday that the company won’t sell Obamacare plans again in states where it has pulled out, and may continue shrinking its participation, “given the unclear nature of where regulation’s headed.” On Wednesday, Anthem Inc. said its ACA business is stabilizing, but it’s carefully watching Washington while developing 2018 plans.

“We will make the right decisions to protect the business,” CEO Joseph Swedish told Wall Street analysts in a conference call. “If we can’t see stability going into 2018, with respect to either pricing, product, or the overall rules of engagement, then we will begin making some very conscious decisions with respect to extracting ourselves.”

Congressional Republicans face a dilemma, too. They want to paint Obamacare as collapsing to help justify its repeal. Yet they need to keep its markets humming this year, and probably into 2018, or take the blame for millions of people who might lose coverage. That will be the topic of hearings Wednesday in the Senate and Thursday in the House.

“Markets need clarity,” Tennessee’s insurance regulator, Julie Mix McPeak, will tell the Senate’s health committee, according to prepared remarks provided before the hearing. If insurers don’t get answers, some will quit the market, and Tennesseans could be left with nowhere to buy coverage, she says in her remarks.

Mixed Signs

Insurers also have their eyes on Trump for signs of whether his administration will stabilize markets or undermine them. So far, the record is mixed. Trump signed an executive order directing agencies to minimize Obamacare’s burdens, though it’s not clear what actions they’ll take. And the Department of Health and Human Services briefly halted efforts to encourage people to sign up for ACA health plans, before resuming them.

When the industry’s main lobby group, America’s Health Insurance Plans, testifies Wednesday, it’ll propose quick actions to keep the law’s markets working and lay out longer-term principles for a replacement, many of which align with Republican plans. And though CEO Marilyn Tavenner, a former top Obamacare official, will note the law’s big expansion of insurance coverage, AHIP won’t defend the ACA, according to prepared remarks.

For now, AHIP wants to keep federal funds flowing, saying subsidies should continue along with promised government payments to health insurers. AHIP also wants an end to the ACA’s health insurance tax and is asking for extra government funds to help cover the costs of caring for the sickest patients.

Over the longer term -- AHIP says any transition will take at least 18 months -- the lobby group says policies that encourage people to stay insured can replace Obamacare’s oft-bashed requirement that people buy insurance. It’s seeking more flexibility for states to determine which benefits are offered and how premiums are set. The group also backs tax credits, linked to income and perhaps age , to help individuals buy their plans.

“Any new coverage options will be meaningless if consumers cannot afford them,” Tavenner said in prepared remarks. “Those who live paycheck to paycheck and struggle to make ends meet should have more generous tax credits and be protected from excessive out-of-pocket costs.”

Some insurers, including Centene Corp., have fared well with Obamacare. CEO Michael Neidorff says the company will keep offering coverage, as long as the markets don’t look markedly worse come September or October.

“It’s business as usual, until we hear otherwise,” he said. “We just take calculated risks, and on this one, they’re not going to leave 20 million people uninsured.”

However, most of the industry will face challenges to stay in Obamacare marketplaces. Plans must be filed with state and federal officials starting in April. Republicans are saying their proposals for Obamacare replacements may come the same month, if not later, and insurers may not have the information they need to participate.

Representative Steny Hoyer of Maryland, the No. 2 House Democrat, accused Republicans on Tuesday of sowing crippling doubts about the health law.

“They create a lack of confidence and then they point and say, ‘See, the ACA is failing,’” Hoyer said. “The chaos and uncertainty that this administration has created over the last 10 days has led to the very thing that they say is the problem.”

Replacement Plans

Congressional Republicans have proposed four amendments to shore up Obamacare, which will be discussed at the Thursday hearing. One change would allow insurers to charge older people more while lowering costs for young people to buy plans. Another would tighten rules for buying coverage outside normal enrollment periods.

“This is a repair element, which provides some interim relief to the huge premium increases that insurance buyers have faced,” said Representative Bill Flores, a Texas Republican who proposed one of the tweaks. “These should become a permanent part of the replacement moving forward.”

Steve Beshear, the former Democratic governor of Kentucky, is playing the role of the ACA’s defender at Wednesday’s hearing. Beshear, who implemented the state’s Obamacare rollout and expansion of Medicaid, will put the stakes in stark terms.

“The ACA has saved lives, led millions to gain coverage, and benefited every American,” according to his prepared remarks. “Repeal without a broad, comprehensive replacement will cause millions to lose their insurance, and many will die.”

Bloomberg News