Health insurers are caught in an increasingly uneasy limbo, trying to make decisions about whether to sell plans on the Affordable Care Act marketplaces next year while President Trump dangles the possibility he will actively undermine the business.
Trump has repeatedly argued that the Affordable Care Act is troubled and will “explode,” but this week he effectively threatened to light the fuse by withholding payments that are the insurance industry’s top concern — health-care industry groups recently called funding the payments “the most critical action” that Republicans could take to stabilize the marketplaces.
Insurers and other health-care industry stakeholders sent letters to Trump and lawmakers Wednesday, insisting that they needed certainty about the federal funds, called “cost-sharing reductions,” that allow the majority of people in the marketplaces to benefit from cheaper deductibles and co-pays. That afternoon, in an interview with the Wall Street Journal, Trump described in detail how he could cause the Affordable Care Act to collapse by withholding those funds.
“If Congress doesn’t approve it, or if I don’t approve it, that would mean that Obamacare doesn’t have enough money so it dies immediately as opposed to over a period of time," Trump told the Wall Street Journal. If the payments don’t get made, he said, "Obamacare is gone, just gone."
With those comments, Trump sowed yet more uncertainty for health insurance companies already struggling to figure out what the business landscape will look like next year and beyond. The specific issue that insurers and the president are focused on at the moment are cost-sharing reductions, payments to health insurers that help reduce the deductibles and co-pays for 7 million Americans. The way the payments are funded has been successfully challenged in a lawsuit by House Republicans, but the administration has continued paying them while the case is on appeal. If the payments are stopped, insurers will have to decide whether to exit the market completely or raise premiums by about 15 percent — and the mere possibility that they could go away or be used as a bargaining chip may make some queasy about offering plans at all.
“This is a very potent threat, because the administration has the authority unilaterally to do this, and this is really a kill switch. This makes the program unprofitable for the majority of health plans operating in it today,” said Dan Mendelson, chief executive of Avalere Health, a consulting firm. “The timing of this threat is really curious, in the sense that now is the time that the plans have to be deciding whether to bid on 2018. If you’re on the bubble and the president is making a threat like this . . . this just puts more uncertainty on the program."
The cost-sharing reductions are sure to come up when insurers meet Tuesday with Seema Verma, administrator of the Centers for Medicare and Medicaid Services; attendees will include the lobbying groups America’s Health Insurance Plans and the Blue Cross Blue Shield Association, as well as individual insurers such as Molina Healthcare.
Kristine Grow, a spokeswoman for America’s Health Insurance Plans, said that the focus should remain on the 7 million people who receive the subsidies and the urgency as plans face deadlines over the next two months.
“We need answers; we need clarity very, very soon,” Grow said.
Democrats signaled Thursday that they may seek to extract a commitment from the Trump administration to fund the cost-sharing reduction payments as part of negotiations over a government spending bill. Current federal appropriations expire on April 28, and a partial government shutdown would follow if Republicans and Democrats cannot agree on how to extend funding.
A Democratic aide familiar with the negotiations but not authorized to comment publicly on them said that the issue rocketed to the top of the party’s priority list after Trump’s comments Wednesday.
“My guess is that somebody has convinced the president that this is good leverage, and the way to get health-care reform passed and get Democrats back on board is to basically use this cost-sharing subsidy as a little bit of a hostage, to force them to the table,” said G. William Hoagland, a senior vice president at the Bipartisan Policy Center and a veteran GOP Senate staffer who has also worked for the insurer Cigna. “I think that’s maybe understandable, but I think that given the complex nature of health-care reform and what’s going on on the hill — I don’t think we’ve got that kind of time."
A Republican health-care lobbyist, who spoke on the condition of anonymity to speak candidly, said that insurers are confused and trying to read the tea leaves of Trump’s statement.
“From an insurance standpoint, the biggest thing is stability for the plans that are deciding whether to remain, and if you don’t have the cost-sharing subsidies for 2018 — and they have to file rates and make final decisions by June or July — I think it’s going to be very hard for many plans to stay in,” the lobbyist said.
Plans are facing various deadlines to set their rates for 2018. But the cost-sharing reduction issue is only the leading edge of a number of uncertainties that could affect how well the markets function. Insurers also want to know if the individual mandate will be enforced and if the administration will do outreach during the open enrollment period to encourage Americans to sign up. The administration did take a step Thursday toward addressing some of insurers’ problems with the marketplaces, by finalizing a rule that makes it harder for people to wait until they are sick to sign up for insurance, among other changes.
Julie Mix McPeak, the commissioner of the Tennessee Department of Commerce and Insurance, which is at risk of having no insurers in 16 counties next year, said that it could be devastating if the cost-sharing payments were to stop.
“I don’t know that we would have any insurers participating in the exchange market, and I don’t think Tennessee would be alone in that,” Mix McPeak said.
Some plans are making their initial rate filings based on the assumption that the current situation will continue, but are hashing out alternate worst-case scenarios in case there are material changes over the coming months.
John Salciccioli, director of actuarial services for commercial business at Independent Health, a nonprofit, New York-based insurer, said that his plan is looking hard at the possibility that the individual mandate goes away. That could have complex ripple effects, because it could mean healthy people don’t sign up for insurance, leaving proportionately more sick people in the pool.
The company must make its rate filings in early May.
“What we have to file is kind of assuming status quo, everything as it is will still be in place in 2018,” Salciccioli said. “It’s my belief, or my hope at least, if something came down after we filed, they would at least hopefully allow us to take another look at rate increases and make adjustments after the fact.”
Mike DeBonis contributed to this story.