Republicans now say they want to stabilize the distressed Obamacare markets for 2018, but it may be too late.
Insurers have warned for months that they need certainty from Washington in order to decide where they will sell Obamacare plans and how much to charge. But after months of fruitless repeal efforts and growing unease over White House threats about pulling funding and undermining the law, the damage may be done. Lawmakers can’t simply flip a bipartisan switch and pass a stabilization plan, particularly since they won’t return to Washington for a month.
Story Continued Below
The health plans don’t have that long. They need to finalize premium rates in most states in the next two weeks and sign final contracts for 2018 by the end of September. And the fifth year of open enrollment is shaping up to have more premium hikes, less consumer choice of health insurers, and the prospect of a score of rural counties having no Obamacare plans whatsoever.
President Donald Trump insists that Obamacare is collapsing. Many insurers and state regulators say that Republican policies and the uncertainty they engendered have created new obstacles just as the exchanges were beginning to find steadier financial footing. Several health plans that announced departures from Obamacare markets in 2018 cited that uncertainty as their motive, and some states have let insurers propose two sets of premiums — one showing how they’d jack up rates 10 or 20 percent if the Trump administration cuts off crucial payments.
“Probably the month of September’s all we have, and that’s a big task for Congress to think about passing even a small stabilization piece of legislation that quickly,” said Tennessee Insurance Commissioner Julie Mix McPeak, who is president-elect of the National Association of Insurance Commissioners.
Given the chaos, regulators in many states are likely to allow some wiggle room on deadlines. But with open enrollment starting on Nov. 1, their options are limited.
Even if Congress does try to put together a stabilization plan, September looks daunting. Lawmakers will be facing deadlines to continue funding the government, raise the debt ceiling and renew the Children’s Health Insurance Program. And they haven’t come close to agreeing on what Obamacare stabilization should look like — and what kind of political tradeoffs would be needed to seal a deal. Conservatives are certain to balk at anything that could be seen as a relief package for insurers
“The solution to the Obamacare crisis is not simply billions of bailouts for giant insurance companies,” Sen. Ted Cruz (R-Texas) said on Thursday.
There’s no mystery about the easiest way to bring greater stability to the wobbly Obamacare markets for 2018: fund cost-sharing-reduction subsidies. Insurers rely on the monthly payments — estimated to be $7 billion this year — to reduce out-of-pocket costs for low-income Obamacare customers. Trump keeps threatening to cut them off.
“CSRs are job one, two and three,” said Joel Ario, a former Obama administration official who helped set up the exchange markets. “If they’re paid I think things will be decent for 2018.”
But if Trump does follow through on his threat, he could tip the insurance markets into chaos. Insurers are certain to jack up premiums, likely in the neighborhood of 20 percent, or could bolt the markets altogether.
“It’s not going to fail in one giant collapse,” said Jeff Goldsmith, a longtime health care consultant. “It’s going to be more like a brownout.”
Anthem, in announcing its pullout from all Ohio Obamacare markets in June, said the state’s individual market “remains volatile, and the lack of certainty of funding for cost sharing reduction subsidies, the restoration of taxes on fully insured coverage and, an increasing lack of overall predictability simply does not provide a sustainable path forward to provide affordable plan choices for consumers.
The tense situation has state regulators twisting themselves in knots trying to accommodate skittish health plans and keep them in the marketplaces. In many states, they’re allowing health plans to submit two sets of rates — depending on whether or not the subsidy payments continue to flow.
“We’re in a very strange position as regulators trying to decide what to do with rate increase requests that are pending before us with all of the uncertainty in the regulatory environment, and yet open enrollment is coming upon us,” McPeak said,
In California, premiums for Obamacare plans are going up by an average of 12.5 percent, state officials announced this week, but those increases would double if the subsidy payments stop. In addition, industry titan Anthem is pulling out of all but three of the state’s 19 markets.
Peter Lee, CEO of Covered California, the state’s exchange, said regulators need reassurance about the subsidy payments not only from the Trump administration, but backed by Congress before they can adopt the lower rates.
“A tweet would not be enough,” Lee said.
In New Jersey, insurers filed their initial rates in June, with the state’s largest insurer, Horizon Blue Cross Blue Shield of New Jersey, requesting average increases of more than 24 percent. But this week, Gov. Chris Christie’s administration announced that it will allow insurers to file new rates because of the continuing uncertainty.
“But one thing is clear: were it not for uncertainty surrounding the future of the [Affordable Care Act], Horizon would be proposing a single-digit rate increase,” Horizon spokesman Kevin McArdle said in a statement.
Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.), the top members of the Senate Health, Education, Labor and Pensions Committee, announced this week that they will hold bipartisan hearings on stabilizing the market when they return to Washington after Labor Day. Their goal is to come up with a plan that can be enacted before insurers have to lock in rates for next year.
In addition, a bipartisan group of House members announced a plan, first reported by POLITICO, on Monday for stabilizing the markets. The blueprint from the roughly 40 members of the “Problem Solvers” caucus includes funding the cost-sharing subsidies, weakening the employer mandate and eliminating the medical-device tax.
But the Trump administration continues to undercut any potential stabilization efforts by celebrating the struggles of the marketplaces. This week it sent out a press release touting Molina Healthcare’s decision to pull out of two states and Aetna’s full withdrawal from the Obamacare markets as evidence of the system’s inevitable collapse.
Those mixed signals add to the skepticism about whether any steps can be taken in time to help stabilize the markets ahead of open enrollment.
Sen. Bill Cassidy (R-La.) said before leaving town on Thursday that he thinks a plan “can be done.” But he added “I’m not an insurance executive obviously.”
Victoria Colliver and Katie Jennings contributed to this report.