Obamacare Insurers Struggle to Set Plans Amid Threats to Program

Obamacare is stuck in limbo, and insurers and state regulators are struggling to set their plans for what’s increasingly shaping up as a chaotic year for the health-care program.

After the failure of Republicans’ first attempt to repeal and replace the Affordable Care Act and President Donald Trump’s subsequent threats to let the program “explode,” more health insurers are threatening to pull out next year, while others may sharply raise the premiums they charge. They’ll start to declare in the next few weeks whether they’re in or out.

Marguerite Salazar, Colorado’s insurance regulator, said that her state’s carriers, which include Anthem Inc. and Cigna Corp., haven’t said they’re leaving, though they don’t want to commit either.

“That’s my biggest fear, is that we would lose carriers in the individual market,” Salazar said. “We don’t want to set up an environment that would tell them, well, maybe we don’t need to be here.”

In Washington, Insurance Commissioner Mike Kreidler pushed back by a month the date when insurers have to say what they’ll offer. He’s urging them to stay and thinks most will, but “they’re not making commitments right now.”

“They’ve got those cards and they’re holding them close,” said Kreidler, a Democrat. “Right now, there’s so much uncertainty.” The fear is that they’ll follow the lead of Aetna Inc. and Wellmark Inc., which pulled out of Iowa’s Obamacare markets this month.

Trump’s Uncertainty

Much of the uncertainty is thanks to the Trump administration, which will play a key role in deciding whether the health law’s markets collapse or survive. Industry representatives — including company executives and insurance lobby CEO Marilyn Tavenner — are scheduled to meet Tuesday with Seema Verma, the head of the Centers for Medicare and Medicaid Services, the U.S. agency that oversees the law.

Trump’s latest threat has been to stop payments that subsidize co-pays and other upfront costs for lower-income people. Without them, insurers would likely boost their premiums or drop out entirely. The administration has refused to commit to keeping the payments going.

Health insurers see April 30 as a key deadline for a decision on the cost-sharing payments. They’ll start filing with some state regulators in May to say whether or not they’ll stay in the markets.

“Everybody is still in a wait-and-see mode,” said Kristine Grow, a spokeswoman for the industry group America’s Health Insurance Plans. AHIP and other industry groups are pushing the administration to commit to making the cost-sharing payments that Trump has threatened to halt. “Plans really need certainty,” she said.

Critical Payments

Insurers contacted by Bloomberg — including Anthem, Cigna, Aetna and Health Care Service Corp., which offers plans under the Blue Cross Blue Shield brand in five states — declined to commit to selling Obamacare plans next year. Companies are sometimes reluctant to discuss strategy before regulators review their filings, and the lack of a commitment at this point doesn’t mean they’ll drop out.

Molina Healthcare Inc. said the cost-sharing-reduction payments are key to its decision.

“We need confirmation that the CSRs will continue to be paid throughout the rest of 2017 and 2018 in order for us to continue our participation,” said Sunny Yu, a Molina spokeswoman.

The fallout could spread across the health-care system. If the uncertainty leads to more people going uninsured, hospitals could suffer. On Monday, HCA Holdings Inc. warned of disappointing first-quarter results, tied in part to sluggish Obamacare signups. It and other hospitals stocks fell sharply.

‘Hostage Takers’

Democrats, who oppose Republican efforts to repeal the law, have decried the threat to stop the payments.

“We will not negotiate with hostage takers,” said Senator Ron Wyden of Oregon. “There is no outcome in which the administration sabotaging insurance markets persuades Democrats to pass Trumpcare.” Democrats and some key congressional Republicans have called for the payments to be made, potentially as part of a bill to fund the government that’s scheduled for action by the end of the month.

Administration officials are holding a meeting at the White House today [April 17] on Obamacare, according to a person familiar with the matter. The topics include changes to the Republican legislation to repeal and replace the health law, as well as the cost-sharing subsidies, said the person, who asked not to be identified because the session wasn’t public.

Better for Some

The political uncertainty is overshadowing what is, for some carriers, an improving financial picture. Without the overhang of the cost-sharing subsidies or major changes to the law, health insurers would be on their way to a profitable 2018, after increasing rates more than 20 percent on average for this year, according to S&P Global Ratings analysis of Blue Cross and Blue Shield health plans.

“The price increases they’ve put in as well as the network design changes, that’s going in the positive direction,” said Deep Banerjee, the S&P analyst who wrote the report. Still, he said, the fate of the cost-sharing payments is a major uncertainty. And if the Republican Obamacare repeal bill changes things in 2018, “then all bets are off.”

In some states, things look better. Maryland Insurance Commissioner Al Redmer said he’s hoping one company will re-join his state’s exchange, while Nevada is attempting to convince Aetna and Centene Corp. to enter the state’s Obamacare market.

“I’m cautiously optimistic that we won’t see a deterioration, and hopefully we’ll have one more,” Redmer said.

Threat of Premiums

The insurance industry has also praised a set of rules released by the Trump administration on April 13 that were designed to make Obamacare more profitable for insurers. Those rules won’t mean much if government funds are cut off, though. Without the cost-sharing subsidies, insurers will have to boost premiums by 19 percent on average to make up the shortfall, according to an analysis by the Kaiser Family Foundation.

“There’s going to be fewer choices and higher costs for consumers,” said Jeff Smedsrud, the CEO of insurance-shopping site Healthcare.com. Smedsrud said insurers are all watching and waiting to see what their rivals do. They don’t want to be the last plan standing in a state, leaving them with more risk.

“It makes insurance companies very nervous about making a misstep, extending themselves beyond what their capital would allow,” he said.