Republicans took the first step toward repealing the Affordable Care Act this week, but health insurers -- lacking details about the transition and eventual replacement -- have remained tight-lipped about how the looming demise of the law could affect their involvement in the deteriorating insurance marketplaces.
Replacing the health-care law, commonly known as Obamacare, could take years, potentially destabilizing the nascent system designed to provide insurance to individuals who don't receive it through an employer. Several large insurance companies had already announced plans to pull out of some health-care insurance exchanges created by the law because of financial losses, and health policy experts fear that repealing the law without immediately replacing it could exacerbate the exodus by adding uncertainty.
"If Congress delays enacting a replacement plan, uncertainty about what might be in that legislation would further destabilize the exchange market," policy experts Joseph Antos and James Capretta wrote in a blog post for the American Enterprise Institute this week. "Some number of current exchange enrollees, as well as insurers, are likely to view the coming termination of the ACA as a reason to withdraw their participation."
But other policy experts predict that Republicans will provide incentives for insurers to stay. America's Health Insurance Plans, the trade organization for health insurers, has called on Congress to keep in place funding for programs that help people afford health insurance in the marketplaces, at least through the end of 2018.
"The problem right now is there’s a huge gulf between the rhetoric of repeal and the reality of taking apart a piece of legislation," said Dan Mendelson, president of Avalere Health, a consulting firm. "In all likelihood, what they will need to do is create some stability for insurance companies during the interim period of time."
Representatives for Anthem, Cigna, Humana and Aetna all declined to comment on the move to repeal the health-care law. The companies are embroiled in lawsuits with the Justice Department, which has blocked their mergers, and their participation in the marketplaces has been one of the issues. Aetna and United Healthcare pulled out of most of their insurance marketplaces this year citing lack of profitability. Anthem and Cigna also have said they're losing money in the marketplaces.
Although the number of companies offering plans in the marketplaces has decreased in many markets, enrollment is up. Through the end of 2016, 8.8 million Americans had signed up for coverage through the federal website -- 200,000 more people than last year.
J. Mario Molina, chief executive of Molina Healthcare -- which covers roughly half a million people in the marketplaces -- said the company is open to changes in the system but must have time to prepare their plan offerings without any disruptions. Insurers already are preparing to make proposed rate filings for 2018 by the May deadline.
"Ideally, we’d all like to know what the future holds -- everyone wants to know what’s coming," Molina said. If ACA is repealed without an immediate replacement, "I hope that there's at least a transition period of two or three years, so that we can very thoughtfully work on reform and the Republicans will take the lessons to be learned from the Affordable Care Act and apply those to the next version."
Even with a transition period, some exchanges may lose insurers or see big premium hikes, particularly if Republicans abruptly end elements key to the financial stability of the insurance marketplace, like the cost-sharing reductions that help low-income people afford coverage. But many experts say it's unlikely that lawmakers would end such a critical aspect of the law.
"That doesn’t mean there won’t be fewer insurers; that’s all entirely plausible," said Tom Miller, a resident fellow at the American Enterprise Institute. "But there’s a difference between 'This isn’t great, it could be better,' and, 'We’re going over the brink.'"
Ana Gupte, a managing director at Leerink Partners, said that even with the end of the Affordable Care Act looming, 2017 could be a better year for insurers offering marketplace plans -- in part because of premium increases. Premiums for benchmark insurance plans sold through the federally run exchanges are increasing by an average of 25 percent this year, though supporters of the law have seen the rise largely as a correction in markets where premiums were priced too low initially or insurers overestimated the healthiness of the population.
"All indications point to a more stable marketplace in '17," Gupte said.
On Tuesday, Republicans introduced a Senate budget resolution to repeal President Obama's signature health care law, but they have provided few specifics on what the the new insurance system would look like. About 20 million Americans now receive health-care coverage through the marketplaces or expanded Medicaid programs.
The likely shape of the Republican plan is known, with refundable tax credits to help people afford coverage and "high-risk" insurance pools for people unable to obtain insurance due to pre-existing conditions. To encourage healthy people to sign up, the Republican plan is also likely to require continuous coverage in order to maintain guaranteed insurance despite pre-existing conditions -- an alternative to the individual mandate, which imposes a penalty.
But specifics of the repeal -- which features will be nullified and when -- are expected to be hammered out in the coming weeks. Most observers expect a multi-year transition period in which many elements of the law remain in place.
Speaking on CNBC on Wednesday, former Aetna chief executive Ron Williams said smoothly transitioning to a new system likely will take at least a few years.
I think what we're going to see is: repeal with a long lead time and then a lot of debate to try to find a program that is market-based and a program that is financially sustainable," Williams said. "That's going to mean some hard conversations about what the country can afford."
Still, critical details remain elusive. President-elect Donald Trump has said that he would like to retain the provision that bars insurers from denying coverage to individuals with preexisting conditions. But what makes that popular provision possible is a well-balanced risk pool, in which both healthy people and sick people sign up for insurance.
There's debate over whether a "continuous coverage" requirement would encourage enough healthy people to sign up to make the market work or would penalize people whose coverage lapses for unavoidable reasons, such as losing a job.
On Wednesday, President-elect Trump appeared to be warning that Republicans that the tables had turned and they would now be vulnerable to blame if things went awry.
"They know they will own the failure, and I think that’s what the tweets are about, this sense of 'who owns the failure,'" Mendelson said. "If they pull the rug out, and everyone exits form the markets, they own the failure."
Leading Republicans have said that there will not be an abrupt drop-off in coverage for millions of people, which suggests that funding for states' expanded Medicaid programs -- a key provision of the health-care law -- may also remain intact in the short term.
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