NEW YORK (Reuters)—U.S. Republicans may be moving ahead with a vote to repeal Obamacare, but the uncertainty about what a national health law may look like is clouding insurers’ decisions on whether to stay in the individual insurance market in 2018.
Republicans do plan to vote on the U.S. House of Representatives bill, the American HealthCare Act, this afternoon, a wide-reaching piece of legislation that would undo the central tenets of Obamacare and create a pathway for an orderly transition next year to the new law.
The House, however, is not the final word. The bill must next go to the U.S. Senate, where the Republican majority is smaller and some have spoken out against the bill. Any changes there would then need to go back to the House for a sign-off, a process with an uncertain timing.
Insurers do not have the luxury to wait and see what the final outcome is before they move ahead with decisions about next year. State regulatory deadlines this week to submit 2018 insurance plans have forced some insurers to make a call on whether to participate in the individual insurance market next year despite not having details they say they need.
“The vote today does not relieve the uncertainty and concerns that the insurance industry has about the (individual)market for next year and beyond,” AEI health policy expert Joseph Antos said.
The insurers have been loudly complaining about the Republican back-and-forth. Republicans pulled the first version of their bill earlier this year, and have issued conflicting statements about whether the administration will continue to fund cost sharing subsidies this year or next year, which amount to $7 billion this year.
In the last week, they have used public conference calls with Wall Street, letters to Congressional leaders and press statements, to promise that if Republicans do not quell the uncertainty over next year, they will leave Obamacare or raise rates beyond what consumers want to pay.
“The window is quickly closely for action to be taken on (subsidies) in 2018,” Kristine Grow, a spokeswoman for the industry’s biggest lobby, America’s Health Insurance Plans, said.
Aetna Inc, which cut its exchange presence by three-quarters this year, on Wednesday said it would exit the Virginia Obamacare market next year.
Virginia and Maryland both had regulatory deadlines this week. Others, like Maine and Pennsylvania, moved those deadlines back to later this month or have July deadlines to give insurers more time to decide. The federal government deadline is in June.
“I think the decision making that we have to make right now has to be based on the reality as it is today,” Aetna Chief Financial Officer Shawn Guertin said in an interview on Tuesday after reporting it would lose $200 million on the business this year and one day before the company announced it would pull out of the Virginia market for 2018.
Molina HealthCare Corp and Anthem Inc have also said in the past week that they need to have resolution on issues like the government subsidies and the individual mandate settled. Together they help build a balanced pool of healthy and sick people that enables insurers to keep prices down.
When only half the number of people signed up compared to expectations, and prices pushing the young and healthy to forego insurances, the market has already been a loss maker for many insurers.
Insurers who are choosing to stay in the market are dealing with uncertainty about the subsidy payments – estimated to be about a 20 percent hit to premiums next year – by raising rates or submitting two sets of rates to states that allow them, like California.
But there are bigger issues that could decrease competition and leave Americans in some areas with no insurer next year – a version of “the death spiral” President Donald Trump tweeted about on Thursday.
“Are the exchanges going to be there in 5 years and if yes, what will they look like?” said Dan Mendelson, head of healthcare consultancy Avalere Health. “The program needs some level of competition to operate effectively.”
