The easiest prediction to make about the healthcare business was that the efforts by Congress and the Trump administration to sabotage the Affordable Care Act would produce a flood of rate hikes by insurers for 2018.
We are now standing on the edge of the water. Early rate requests have come in from insurers in five states, according to ace ACA-tracker Charles Gaba, who calculates the weighted average rate request increase in those states at about 30% (that is, weighted for the enrollment of each insurer).
Many are blaming the doubt and confusion sown by Congress and the White House for one-third or more of their requested increases over 2017 rates.
"Uncertainty is already clearly leading to significantly higher rate hike requests than would otherwise be asked for," Gaba observes.
It's proper to note that some insurers, as well as Standard & Poor's and the Congressional Budget Office, were seeing signs of stabilization in the individual market for 2018. Those projections are now getting reversed.
The Trump effect includes continued uncertainty about whether the feds will make cost sharing reduction payments. These are subsidies payable directly to insurers that cover deductibles and co-pays for approximately 6 million families with incomes below 250% of the poverty line.
House Republicans have sued to stop the payments on grounds that the Affordable Care Act provided for the subsidies but didn't appropriate funds for them. Trump hasn't said whether he will continue the Obama administration's policy of paying them until and unless a court decisively rules against them. Instead, he's even threatened to withhold them as a bargaining chip to force Democrats to negotiate an Obamacare repeal.
Another aspect of Trump policy that unnerves insurers is the indication that the administration will stop enforcing the individual mandate, which requires every American to have coverage — a linchpin of the ACA system because it balances the ACA's mandate that insurers cover people with preexisting medical conditions without a surcharge.
Trump's efforts to undermine the ACA date back to inauguration day, as the Center on Budget and Policy Priorities documents in its "Sabotage Watch." On that day, Trump issued an executive order encouraging the Department of Health and Human Services to take an indulgent view of enforcing the individual mandate. A week later, the administration canceled an ad campaign and other outreach aimed at prompting holdouts to sign up for coverage before the deadline. Enrollments fell off a cliff.
Some insurers are being painfully direct about the Trump effect. Blue Cross/Blue Shield of Tennessee, which is moving into several counties abandoned by Humana, told the state's insurance regulator in a May 9 letter that it would be raising rates in part because of the chaos in Washington:
"Given the potential negative effects of federal legislative and/or regulatory changes," the letter says, "we believe it will be necessary to price-in those downside risks….These risks include but are not limited to the elimination of Cost Sharing Reduction subsidies (CSRs), the removal of the individual mandate and the collection of the health insurer tax."
The tax referred to in the letter is a health insurer fee imposed by the ACA but suspended through this year. Next year it's expected to bring in more than $14 billion, Insurers have been lobbying for years to get it revoked, and the Obamacare repeal bill passed by House Republicans last month does so, but doesn't provide any funding to cover the gap.
Insurers in other states have pointed to the CSR uncertainty and other vacuums in Trump policy as grounds for portions of their rate hikes or reasons to pull out of the ACA individual exchanges altogether. Medica, the only insurer signed up to provide individual policies in Iowa next year, says it's still pondering whether to do so barring "swift action by the state or Congress to provide stability to Iowa's individual insurance market," a Medica executive, Geoff Bartsh, told the Des Moines Register.
"Bartsh said Congress isn't helping the situation by continuously arguing over how to change rules in midstream while insurers are trying to figure out their rates for 2018," the paper reported. "When asked what advice he would have for current Medica customers in Iowa, Bartsh replied: 'Call your elected officials.'"
In Pennsylvania, five insurers joined with the state insurance commissioner to warn Health and Human Services Secretary Tom Price on April 26 that the market in that state is tottering because of federal inaction. "The most immediate drivers of instability are the weakening of the individual mandate, the uncertain status of funding for the cost sharing reductions and the absence of funding for overall market stabilization measures."
Market stabilization measures mean the risk corridor provision of the ACA that was designed to subsidize insurers that acquired a customer base with an above-average level of risk; the program was undermined by congressional Republicans, who effectively cut its funding.
"The absence of certainty regarding market parameters and in particular those with direct financial consequence," the insurers and commissioner continued, "magnify the risks of market participation in a way that issuers and regulators cannot ignore."
Joe Swedish, the CEO of Anthem, a big insurer on the exchanges, has threatened to raise rates or pull out of some states if the CSR doubts aren't resolved soon. "We plan to file preliminary 2018 rates with the assumption that the cost-sharing reductions will be funded," he said during the company's first-quarter earnings conference call. But "if we do not have certainty that CSRs will be funded for 2018 by early June, we will need to evaluate appropriate adjustments to our filing. … Those adjustments could include resubmitting higher rates increases or exiting certain individual ACA-compliant markets altogether."
Despite these warnings, the Trump administration and congressional Republicans continue to pretend that the ills of the individual market are President Obama's fault. Earlier Tuesday, Price remarked that "the failure of the individual marketplace under Obamacare is driving insurers out of counties and states at an alarming rate, leaving millions of Americans without choices for affordable health insurance."
He showed no willingness to acknowledge that his own policies are responsible for a good part of those problems, and the failure of the White House and congressional GOP to take the matter in hand allows them to fester.
The Republican game plan long has been based on blaming any collapse of the individual market on the law itself and its implementation under the Obama administration. But there are clear signs that that won't work. The tide of anger visible in town hall meetings held by Republicans who voted to repeal Obamacare in the House is evidence that they're being held responsible. So, too, is the result of a Quinnipiac University opinion poll released last week, showing intense disapproval of the GOP repeal plan across all age groupings and all political categories except Republicans—but even GOP voters failed to give the measure more than 48% support.
With control of both houses of Congress and the White House, the GOP is "it" on healthcare policy now. If the individual market collapses, they'll get the blame.
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