Obamacare’s health insurance
markets are flirting with financial disaster — and that’s before
Republicans have had a chance to lay their hands on the law they’ve
vowed for seven years to repeal.
The insurance markets, which have been bleeding money, have
taken one hit after another this week, beginning with news that
Humana
would become the first major insurer to pull out of the market
completely next year.
Molina — which had expected a $60 million profit
on the exchanges for 2016 — reported a $110 million loss on Wednesday,
and will assess ongoing participation at a later date. “There are simply
too many unknowns with the marketplace program to commit to our
participation beyond 2017,” said CEO Mario Molina.
Other insurers are sounding alarms about the imperiled market.
“Death spiral” is how influential
Aetna CEO Mark Bertolini
summed it up Wednesday morning, predicting that plans will flee,
creating insurance deserts in swathes of the country. President Donald
Trump blasted out Bertolini’s remark in a tweet.
The Trump administration, which hasn’t yet delivered its
promised repeal and replace plan to Congress, is sending
mixed signals.
One minute it’s weakening Obamacare by taking steps that dampened
enrollment. Another minute it’s trying to entice insurers to stick
around long enough to transition to an eventual GOP replacement — but
with steps that industry analysts say may fall short.
“I don’t know that it’s going to keep insurers in if they
were otherwise inclined to exit,” said Caroline Pearson, an expert on
the Obamacare marketplaces at consulting firm Avalere Health.
The administration’s
zigzags haven’t placated worried
insurers, who see another year of red ink from enrollees that are older
and sicker than they had expected. Congress’
paralysis on repeal and
replacement translates into precisely the kind of uncertainly that makes
risk-averse insurers want to run for cover.
And Trump’s executive
order, signed just hours after his inauguration,
unnerved the health
plans with its call for government agencies to abolish as much of the
law as possible through administrative action. That fueled fears that
his administration won’t enforce the individual mandate requiring most
Americans to get coverage.
“There’s no way of knowing from outside if the left hand
doesn’t know what the right hand is doing or if the Trump administration
is somewhat conflicted,” said Larry Levitt, senior vice president at
the Kaiser Family Foundation.
Trump has said he’d send a
repeal plan to Congress
soon.
But his new
HHS Secretary Tom Price
offered no specifics in his first meeting with Republican senators since
his confirmation last week, according to several lawmakers who attended
Wednesday.
“It was a good meeting but I don’t know that too much new was revealed,” said Cory Gardner (R-Colo.).
"For each of my questions he came up with the same answer,”
said Bill Cassidy (R-La.). “
We have the House, the Senate and the
administration negotiating on this.”
HHS on Wednesday
proposed a set of new rules to stabilize
the market,
partly by
1- cracking down on loose enrollment rules that
insurers have complained allowed some Obamacare customers to wait until
they get sick to seek coverage.
2-They would also shorten the enrollment
period to six weeks for 2018, and set out other fixes that insurers see
as a down payment —
but consumer groups say will raise costs even more,
further discouraging younger and healthier people from signing up.
Despite the headlines generated by
Humana — which had
already exited much of the market before this year —
most health care
experts don’t see a death spiral. Blue Cross Blue Shield plans dominate
the markets in many states, and so far those plans aren’t pulling out.
But
Anthem, which sells Blue-branded plans in 14 states, has
warned that it may reconsider participation if steps aren’t taken to
improve the market’s financial viability..
“We still need certainty about short-term fixes in order to
determine the extent of our participation in the individual market in
2018,” said Anthem CEO Joseph Swedish, on a call with investors earlier
this month.
Jeff Goldsmith, a veteran health care consultant, said
Bertolini’s apocalyptic rhetoric is a bargaining tool to impel Congress
and the Trump administration to make insurer-friendly changes to the
markets.
”They don’t have a choice,” Goldsmith said, of the Trump
administration’s efforts to prop up the markets. “They’ve got kind of a
dead patient there.”
Indeed, there are some states that already look fraught for
2018. In Tennessee, Humana is currently the only carrier in 16 counties.
If no insurer fills the void, that would leave roughly 50,000 Obamacare
customers with no place to turn for coverage.
“In most of the country the marketplaces have been
stabilizing,” said Levitt. “This program was always going to take some
care and feeding to work going into the future. … If you’re losing money
right now, and you don’t think the law is going to be around in a
couple of years, why stick around?”