Deadline forces decision

Looming Obamacare deadline forces decision from skittish insurers

By PAUL DEMKO

Decision day is here for the health insurers that serve Obamacare markets.

The health plans must decide by Wednesday whether to file plans to sell through the federal exchange HealthCare.gov in 2018. But they’re still waiting for assurances the Trump administration will fund subsidies to reduce low-income customers’ health costs.

The White House on Tuesday agreed to make the payments for June. But uncertainty over what happens after that is turning efforts to cover Obamacare’s poorest customers into a game of chicken — and adding instability to already shaky insurance markets. At least a half-dozen plans have already announced plans to drop out, leaving tens of thousands of customers uncovered if no one else steps in.

“There’s absolutely no guarantee they will get those payments, and that’s what’s driving insurers crazy,” said Tim Jost, a legal expert on the Affordable Care Act.

That’s not the only uncertainty hampering insurers’ decisions about marketplace participation and pricing. There’s also confusion about whether the Trump administration will continue enforcing the 2010 health law’s mandate that most Americans obtain coverage — and about the fate of congressional Republican efforts to repeal and replace the ACA. Senate GOP leaders are still trying to cobble together enough votes to pass a bill by the end of next week.

An HHS spokeswoman said Tuesday the agency is “weighing our options and still evaluating the issues” surrounding the subsidy payments. “Congress could resolve any uncertainty about the payments by passing the AHCA and reforming Obamacare’s failed funding structure,” she said, referring to the House Obamacare repeal plan.

The muddled outlook is leading plans to retrench or dramatically raise prices to protect themselves from what’s proven to be a turbulent, money-losing experience over the last three years.

“The market is still a very challenged market,” said Caroline Pearson, a senior vice president at Avalere Health. “That very challenged market is exacerbated by political uncertainty around ACA repeal and cost-sharing reduction payments.”

Opting in by Wednesday’s deadline doesn’t commit plans to remain in the marketplaces. They can walk away as late as the end of September, when they have to sign contracts. But just going through the initial rate-setting process is costly and time-consuming.

Some plans have already had enough and are exiting markets, citing uncertainty over the subsidy payments and the GOP repeal efforts. That includes Anthem’s decision to drop out of Ohio, potentially leaving up to 18 counties without any options for coverage.

The current state of play shows as many as 44 bare counties for 2018, accounting for 31,000 Obamacare customers, according to the Kaiser Family Foundation. Federal subsidies, which more than 8 in 10 exchange enrollees rely on to afford coverage, would be rendered worthless if there are no plans willing to participate.

“It’s fair to say that this is unprecedented that there’s so many counties at risk of being bare,” said Cynthia Cox, who tracks insurer participation for the Kaiser Family Foundation.

Some insurers still see business opportunities in the exchange markets.

Centene announced last week that it plans to enter three new states next year and expand its footprint in six others. Although the insurer wouldn't elaborate on specific counties, several of the states are among those with coverage gaps. In addition, Medica announced plans to sell individual plans statewide in both Nebraska and Iowa. That dampened fears that those states might lack carriers in 2018 for dozens of counties following the exits of Aetna and regional Blue Cross Blue Shield plans.

But there’s other grim news that could have more widespread ramifications: Premiums continue to skyrocket in much of the country. Many analysts had predicted that the huge rate hikes for 2017 — averaging more than 20 percent — were a one-time correction, and that there would more sustainable increases in 2018 and beyond.

The filing season so far points to more turbulence. An Avalere Health analysis of proposed rate hikes for the most popular Obamacare plans in eight states found average rate hikes of 18 percent. That was well above the 12 percent average premium increase for so-called silver plans in 2017.

Even historically stable markets are showing signs of tumult. In Washington state, which has embraced Obamacare, insurers want to raise rates for individual plans by an average of more than 20 percent for next year, and one county doesn’t have an insurer willing to sell coverage.

There are several factors behind the steeper-than-expected rate hikes, most notably uncertainty surrounding the cost-sharing subsidies.

While the Trump administration has so far continued making payments to plans, there’s no guarantee they will continue beyond this month. President Donald Trump has repeatedly suggested that he sees the fate of the payments as leverage to propel Democrats to negotiate on Obamacare repeal — even though Democrats have ruled that out.

Trump has remained noncommittal, despite recent calls from top Republicans such as House Ways and Means Chairman Kevin Brady (R-Texas) and Senate Health, Education, Labor and Pensions Chairman Lamar Alexander (R-Tenn.) for continued funding.

“The payments will help to avoid the real possibility that millions of Americans will literally have zero options for insurance in the individual market in 2018,” Alexander said at a committee hearing last week.

But there’s also anxiety around whether the individual mandate will be enforced, and whether younger and healthier customers decide to drop coverage if they conclude they won't have to pay a fine.

New Mexico Health Connections is proposing rate hikes of up to 80 percent for next year. That assumes that there will be no cost-sharing subsidies and that the individual mandate won’t be enforced. It also reflects evidence that the plan is already seeing its cohort of younger, healthier customers dropping coverage.

“That tells us that the near-death spiral is a real phenomenon,” said Martin Hickey, CEO of New Mexico Health Connections.

The New Mexico insurer also is pricing in the possibility that it could be the only health plan left serving the market and soaking up all the financial risk.

Without all of these exacerbating factors, Hickey estimates that rate hikes would be much different. His educated guess: increases of 10 to 20 percent.

The other big wild card is what’s going to happen on Capitol Hill. Republicans had hoped to have a bill on the president’s desk before spring break, but now they’re struggling to get something passed before they adjourn for the August recess. That’s adding to insurers' anxiety.

“I absolutely think it exacerbates the rates for 2018,” said Tennessee Insurance Commissioner Julie Mix McPeak, a Republican. “Everyone thought we would have a bit more certainty at this point.”