President Trump and congressional Republicans finally goaded the health insurance industry into defending the Affordable Care Act this week — sort of. But the industry's pusillanimous response to the GOP's point-blank threat to Obamacare's survival is a reminder that health insurance companies, which have made hundreds of millions of dollars from the law, have in many ways been its worst enemies.
The health insurers' rare defense of the law came via separate letters from the industry's lobbying arms, America's Health Insurance Plans and the BlueCross BlueShield Assn., to Trump and to congressional leaders. The letters warn that the Republican failure to bring "stability" to the individual insurance market threatens to drive more insurers away, push up premiums and other costs, and burden hospitals and other providers with more unpaid bills.
But the letters amounted to less than a full-throated defense. For one thing, they focused on the law's so-called cost sharing reductions, or CSRs.
These are subsidies offered to households in the individual insurance market with incomes below 250% of the federal poverty level. The subsidies, which help cover out-of-pocket expenses such as copays and deductibles, are paid directly to the insurance carriers.
House Republicans sued to have them declared illegal because the money wasn't specifically appropriated by the ACA. A federal judge agreed last year, but stayed her ruling pending appeals. The Trump administration hasn't said whether it would continue the appeal or let the payments die.
Ending the subsidies, which are estimated at about $7 billion this year for 7 million policyholders, would cripple the individual health insurance market. In some states, insurance companies have the right to end coverage immediately if the cost sharing reductions are nullified.
For the most part, the health insurance industry's approach to the ACA has been a not-so-benign neglect. Insurance company chief executives have seldom spoken up in public forums to defend the law, even though in smaller groups — meetings with investment analysts, for instance — they've admitted that they've made lots of money from some aspects of the individual insurance market.
The one notable exception is J. Mario Molina, the CEO of Long Beach-based Molina Healthcare, which has accumulated 600,000 ACA customers in nine states by serving chiefly the population that obtains coverage through the law's expansion of Medicaid. In recent months Molina has become a fixture in news articles and cable TV programs, explaining what's wrong with the approach to Obamacare taken by President Trump and the Republican majority in Congress.
Partially because Molina Healthcare's customer base is mostly low-income consumers who are a principal target of the ACA, Molina has been outspoken about the program's value to the millions of Americans it serves.
We spoke with Molina on Thursday to follow up a conversation we reported In January, when he expressed concern that the absence of a solid Obamacare replacement plan might prompt more insurance companies — including his own — to exit the exchanges or reduce their participation, narrowing choices for consumers and driving up premiums.
Molina seemed to be the sole industry CEO to take a proactive stance against the GOP measure that finally surfaced — the American Health Care Act, which was rushed, superficial and brimming with provisions that would have deprived an estimated 24 million Americans of coverage and driven up costs for many millions more. The measure was such a mess that it failed even to come to a vote in the House.
"I couldn't see anything that was good for the industry or for the patient in the bill," Molina told me. "They were going to take money away from healthcare and use it to fund tax cuts for basically wealthy people."
Other insurance CEOs haven't been anywhere near as solicitous of the ACA's benefits or as critical of Republican efforts to erode them.
Joseph Swedish, the chief executive of Anthem, praised the repeal measure, telling two House committees by letter that it "addresses the challenges immediately facing the individual market and will ensure more affordable health plan choices for consumers in the short term."
Aetna CEO Mark Bertolini declared in February that the ACA was in a "death spiral." That claim has been contradicted by the Congressional Budget Office and by healthcare analysts at Standard & Poor's, who reported Monday that if politicians resist sabotaging the market, 2018 will be a year of "gradual improvement" in insurer financial results. "The ACA individual market is not in a 'death spiral.' "
Molina says he understands why some of his fellow industry leaders have been loath to defend the law. "The large insurance companies like Aetna, United, Humana and Cigna are not heavily invested" in the ACA, he says. The nation's biggest health insurer, United Health, never was a major player in the exchanges and has largely abandoned the business. Aetna, Humana and Cigna have been relatively minor participants and are planning to shrink their individual business even more.
Insurance executives "are afraid," Molina says. "You saw what happened with Boeing when President Trump started tweeting about them — their stock went down. If you're the CEO of a publicly traded company, you live and die by your stock price. So they're saying, why should we take on this fight?"
The big companies have other concerns that outweigh the fortunes of the individual market, observes Wendell Potter, a former Cigna executive.
"They'd just as soon go back to the way things were before Obamacare, when they could charge more and declare people uninsurable," Potter says.
Yet the insurance industry may not have realized that by tolerating attacks on the individual exchanges, it was emboldening Republicans to take aim at features of the ACA they like, such as Medicaid expansion. As we reported last year, that side of the ACA business has been so lucrative that the big insurers have hungered for more.
As for the subsidies, Trump has repeatedly indicated that he isn't sure about maintaining the payments; as recently as Wednesday he said in an interview with the Wall Street Journal that he was considering using the provision as a cudgel to force Democrats to negotiate a repeal of the law.
The continuing threat is what prompted the industry letters warning of the urgent need to stabilize the individual market for 2018, by removing "uncertainty about continued funding for cost sharing reductions."
The industry groups' focus on the subsidies shows their difficulty in obtaining a consensus on anything else among their members, who serve a highly diverse field. Almost the only point they can agree on is the magnitude of pain if the government suddenly reneged on $7 billion in promised subsidies.
Yet health insurers surely owe the public a greater duty than merely protecting their own profits.
The Affordable Care Act's greatest burden since its enactment in 2010 has been that its supporters abandoned its defense almost immediately instead of protecting it from its enemies and pursuing necessary refinements.
The health insurance industry failed too by never standing up for the law. Repeal of the ACA would mean a smaller industry, and a less profitable one if Republicans roll back the Medicaid expansion. Their lukewarm lobbying today is a small step forward, but it won't make up for seven years of cravenness and cowardice. If they don't want to preside over the collapse of their own industry, they need to speak much louder.
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8:05 p.m.: This column was updated with additional details and editing.