The biggest health insurers are freaking out about the uncertainty surrounding Obamacare's repeal

paul ryan
paul ryan

(House Speaker Paul Ryan.Aaron P. Bernstein/Getty Images)

  • Republicans' plan to repeal and replace Obamacare has created uncertainty around the law's individual health insurance exchanges.

  • Insurers are considering not offering plans on the exchanges in 2018 because of the unclear future.

  • If insurers pull out of the exchanges because of the uncertainty, it could cause the "death spiral" Republicans have been talking about for years.

The Republican plan to repeal and replace the Affordable Care Act, better known as Obamacare, has introduced a high level of uncertainty in the health insurance market, and the CEOs of major insurers are concerned about the future.

Over the past few weeks, several insurance executives have expressed concern and uncertainty about their business strategy regarding the ACA's individual insurance exchanges.

The exchanges, where people who are not covered through their employer or Medicaid or Medicare can buy insurance, are a key part of the ACA that's being targeted by the GOP's repeal strategy.

Because Republican lawmakers are still in the midst of repealing the law and have not laid out a cohesive plan for replacement, insurance executives are taking a cautious look into the future.

Insurers are nervous

"We have no intention of being in the market for 2018," Aetna CEO Mark Bertolini said during his company's earnings call on Tuesday. "Currently, where we stand, we'd have to have markets worked up ... prices worked up for April 2017 to apply, and there is no possible way that we'll be able to do that given the unclear nature [of where] that regulation is headed."

Insurers must submit plans, including premium prices, for the 2018 plan year to federal and state regulators in April 2017.

Given the short turnaround, it may be even harder to get insurers to commit to offering plans on the exchanges in 2018.

Anthem CEO Joseph Swedish echoed similar concerns during his company's earnings call on Wednesday, despite the fact that the company expects its ACA plans to be "break-even to slightly profitable in 2017."

"While the direction in Washington has been positive, we still need certainty about short-term fixes in order to determine the extent of our participation in the individual market in 2018," Swedish said.

Several high-profile insurers, including Aetna, UnitedHealth Group, Cigna, and Humana — four of the five large public insurers — decreased their exposure in the ACA exchanges in 2017 because of financial losses.

Mark Bertolini, Chairman and CEO of Aetna, participates in a panel discussion at the 2015 Fortune Global Forum in San Francisco, California November 3, 2015. REUTERS/Elijah Nouvelage/File Photo
Mark Bertolini, Chairman and CEO of Aetna, participates in a panel discussion at the 2015 Fortune Global Forum in San Francisco, California November 3, 2015. REUTERS/Elijah Nouvelage/File Photo

(Mark Bertolini, chairman and CEO of Aetna.Thomson Reuters)

Despite the already declining insurer participation, it seems the uncertainty created by the repeal plan has only hastened the abandonment of the exchanges.

Even insurers that have been profitable on the exchanges are talking about leaving because of the repeal plan.

Mario Molina, CEO of Molina Healthcare, told Politico's Victoria Colliver that despite being successful on the exchanges, his company may not stick with the ACA if its future is unclear.

"People keep asking me, 'Are you going to stay in?'" Molina told Politico. "I don't know. It's kind of like asking whether you're going to buy a car in 2018. I'm not going to commit to something when I don't know what the product looks like."

In a testimony before the Senate on Wednesday, Marilyn Tavenner, the CEO of the leading health insurance lobby group America's Health Insurance Plans and former head of the Centers for Medicare and Medicaid Services, told lawmakers that quick action is needed for insurers to be able to make 2018 work.

"Right now, plans are trying to price for '18, and the uncertainty around cost-sharing subsidies and the tax credits would cause them to hesitate to price because we need to understand what the funding support is going to be, because that affects premiums," Tavenner said.

Tavenner also said the companies "need predictability for long periods of time" in order to offer effective plans.

Creating a 'death spiral'

Republicans have maintained that the law is collapsing on its own and is in a "death spiral" because of insurers' losses and declining numbers of insurers participating, eventually leading to lower consumer enrollment.

The nonpartisan Congressional Budget Office, however, projected that enrollment and costs would stabilize over the next 10 years. With insurers pulling out, however, health policy experts have said the uncertainty could end up creating the "death spiral" that the GOP has feared.

President Donald Trump has expressed a desire to quickly get a replacement plan in place, which may mitigate some of the uncertainty and minimize disruptions in the individual exchanges. He also has said he doesn't want the exchanges to collapse and leave people with higher costs or no coverage, even though he said the Democrats would "own it."

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