Reuters logo
Obamacare exploding? Maybe just a slow burn
March 25, 2017 / 12:30 AM / 7 months ago

Obamacare exploding? Maybe just a slow burn

NEW YORK/WASHINGTON (Reuters) - U.S. President Donald Trump said on Friday that Obamacare was “exploding” after Republican lawmakers shelved legislation that would have dismantled the healthcare law.

That’s not going to happen this month. Probably not even this year.

The more than 12 million people who bought 2017 health insurance plans on HealthCare.gov and other websites the law created are not in danger of losing their healthcare or having their premiums go up right now, experts say.

But 2018 is another story.

Republicans could choose to pass a budget that defunds Obamacare’s cost-sharing subsidies, which help low-income people cover out-of-pocket and other medical costs. But that would be highly unpopular among consumers who would likely blame the president and Congress for skyrocketing healthcare costs, experts said.

“That is one of the ways that is available to monkey wrench the Affordable Care Act,” said Morgan Tilleman, an associate with the law firm Foley & Lardner, who represents insurers.

Obamacare, former Democratic President Barack Obama’s signature legislation created by the Affordable Care Act of 2010, has had a tough beginning. The mix of sick and healthy customers has been worse than expected, and premium rates on the individual insurance market went up 25 percent this year.

Other parts of the law, like the expansion of Medicaid to enhance coverage for the poor, and changes to allow young people to stay on their parents’ health plans, have been popular. And the defeat of the bill is a win for the hospitals that have benefited from those increased Medicaid dollars.

But many counties across the country have only one insurer, after Humana Inc, Aetna Inc and UnitedHealth Group Inc pulled out after reporting hundreds of millions of dollars of losses.

The insurers who are left, Anthem Inc and other BlueCross BlueShield insurers across the country, as well as smaller players like Centene Corp and Molina Healthcare Inc need to decide in the next few months where to sell insurance and how much to charge.

And that is where the market’s slow burn takes off, with insurers leaving and premiums rising.

Activists protest against the Republican plan to repeal Obamacare during a rally in Freedom Plaza in Washington March 23, 2017. REUTERS/Kevin Lamarque

Jeff Jonas, a portfolio manager at Gabelli Funds who focuses on health care, said that for consumers, 2018 looks uncertain, with a “death spiral” of decreasing competition and increasing premium rates ramping up.

LOOKING TO 2018

After the failed Republican effort to push through the bill, insurers are looking at changes to help 2018, America’s Health Insurance Plans spokeswoman Kristine Grow said.

That includes the market’s cost-sharing subsidies as well as other government payments for sicker-than-usual customers and finalizing a rule the Trump administration proposed that addresses issues insurers say drives up costs.

The Trump administration could do some of that itself if it wants to, such as using its regulatory authority to adjust the formula for how it compensates insurers for the sickest people, Elizabeth Carpenter at healthcare consultancy and research firm Avalere Health said.

But it is unknown if the administration will try to work within the law’s existing framework or take actions to undermine it and blame the Democrats for its failure.

“If they fail to act and they don’t act in an appropriate way, that will further destabilize the marketplace,” Dr. Mario Molina, CEO of Molina Healthcare, said. Molina’s enrollment ballooned to 1 million exchange enrollees this year and the company is weighing if it will submit plans for next year.

The administration could also decide to not enforce the individual mandate, which requires that everyone purchase health insurance or pay a fine. It already took steps to erode that provision last month, when it backed off implementing tougher oversight that was due to go into effect for 2016 taxes.

Experts said the individual mandate still cost less than purchasing insurance, but as it increases each year more young and healthy people would have incentive to join the healthcare market, helping to offset the cost of sicker patients.

The nonpartisan Congressional Budget Office estimated that 14 million more people would be uninsured under the Republican bill next year, with most of the increase coming from the repeal of the penalty associated with the individual mandate.

It’s unclear what the Republicans will do. Trump said this bill had been shelved but that Republicans would end up with a “great” healthcare bill in the future, but for now that they are moving onto tax reform.

Until they do that, they will have to work within the 2010 Affordable Care Act. It can also undercut the healthcare law through regulatory authority at the Department of Health and Human Services.

Reporting by Caroline Humer and Yasmeen Abutaleb; Editing by Lisa Shumaker

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below