California’s Obamacare exchange scrubbed its annual rate announcement this week, the latest sign of how the ongoing political drama over the Affordable Care Act is roiling insurance markets nationwide.
The exchange, Covered California, might not wrap up negotiations with insurers and announce 2018 premiums for its 1.4 million customers until mid-August — about a month later than usual. Similar scenarios are playing out across the country as state officials and insurers demand clarity on health care rules and funding, with deadlines fast approaching for the start of open enrollment this fall.
“It’s insane,” said John Baackes, CEO of L.A. Care Health Plan, which has about 26,000 customers on the California exchange. “Here we are in the middle of July and we don’t even know what rules we will be operating under for open enrollment. It is not how you want to run a business.”
Consumers could face sharply higher premiums and fewer choices if more health insurers leave the insurance marketplaces due to lingering uncertainty. State and industry officials around the United States are concerned that the federal government could stop funding so-called cost-sharing subsidies that reduce out-of-pocket costs for low-income consumers. And they worry the Trump administration won’t enforce the individual mandate that requires people to purchase health coverage or pay a penalty.
Amid those concerns, there was a sense of relief Tuesday among many exchange officials and insurers after the U.S. Senate’s latest attempt to replace the Affordable Care Act failed.
Two large insurer trade groups bluntly warned last week that parts of the Senate plan were “unworkable” and could plunge the market into chaos. In a letter to the Senate, America’s Health Insurance Plans and the Blue Cross Blue Shield Association particularly objected to an amendment by Sen. Ted Cruz (R-Texas) that would have allowed insurers to sell bare-bones health plans to people who wanted cheaper premiums. That provision, the insurers said, would split the market between the healthy and the sick, driving up costs for people with preexisting conditions.
However, the Republicans’ failure to pass that ACA replacement plan did not resolve questions swirling around the current health law.
Tuesday, President Donald Trump expressed disappointment at the outcome in the Senate, telling reporters, “We’ll let Obamacare fail and then the Democrats are going to come to us and they’re going to say, ‘How do we fix it?’”
Some Senate Republicans struck a more conciliatory tone, suggesting that lawmakers should work on a bipartisan measure that would help stabilize the individual insurance markets.
Sen. Lamar Alexander (R-Tenn.), chairman of the Senate Committee on Health, Education, Labor and Pensions, said he plans to hold hearings in the coming weeks on ways to shore up the individual insurance market. Lawmakers may look at creating a new stabilization fund that helps compensate insurers for higher-cost patients. Such a fund would be similar to one that existed during the first three years of the ACA exchanges.
Some insurance industry executives welcomed the talk of bipartisanship, but they said action must be taken quickly to resolve key issues affecting consumers.
“We are running out of time and we need a resolution on what we are charging for 2018,” said Gary Cohen, vice president of public affairs at Blue Shield of California in San Francisco, the largest Covered California insurer by enrollment.
Cohen, who helped launch the exchanges in 2014 as an official in the Obama administration, noted that the Republican bills in both the House and Senate included money for reinsurance that can help lower premiums industrywide. Those provisions are among the “immediate steps Congress and the Trump administration need to take in order for markets to provide coverage that is affordable.”
A federal reinsurance program helps compensate insurers for the high costs incurred by the sickest patients. That, in turn, allows health plans to keep their overall premiums lower and attract healthier customers into the insurance pool.
Lawmakers could also appropriate federal funds for the cost-sharing subsidies, which have a price tag of about $7 billion a year. Those payments, made directly to insurers, help reduce deductibles and other out-of-pocket costs for policyholders who earn up to 250 percent of the federal poverty level. This year, that’s up to about $29,000 for an individual or around $61,000 for a family of four. More than half of the people enrolled on exchanges nationwide qualify for this financial assistance.
Without it, many consumers would face annual deductibles of $2,000 or more when visiting the doctor or undergoing medical tests. That would make people far less likely to sign up with participating insurers.
Conservatives generally oppose the subsidies, calling them a bailout of the insurance industry and arguing that the Obama administration didn’t have the authority to pay them. Trump has repeatedly threatened to cut off those cost-sharing subsidies as well.
With their future up in the air, some states, including California and Pennsylvania, allowed insurers to submit two sets of proposed premiums. One filing reflects continued federal funding of those subsidies, and a separate one assumes they are eliminated and their cost is included in health plan premiums.
In Pennsylvania, premiums next year without the subsidies would increase by an average of 20 percent, compared with 9 percent if they remained intact.
Pennsylvania Insurance Commissioner Teresa Miller said the market in her state would be in good shape without the uncertainty over federal policy. “The only thing right now keeping everyone on edge is what’s going to happen in Washington, D.C.,” Miller said. “If things calm down in D.C. and if we don’t see further changes, then Pennsylvania’s market really is stabilizing.”
On Tuesday, Covered California said the two different rate filings its health plans submitted will be released Aug. 1. The exchange may announce that same day what the final premiums are, or it could postpone the decision for several more weeks if Congress has begun to pursue fixes to the ACA.
“This decision is based on the ongoing federal uncertainty around the repeal and replacement attempts of the Affordable Care Act and the dramatic potential impacts such uncertainty has on the rates and on California consumers,” the exchange said in a statement.
A recent analysis commissioned by Covered California estimated that premiums for silver-tier plans would jump by 16.6 percent if the federal government stopped paying for the cost-sharing subsidies. That would be in addition to normal increases meant to cover rising medical costs. An exchange spokeswoman declined to comment further Tuesday, citing the ongoing developments in Washington.
In the Florida exchange market, health insurers have sought an average rate increase of nearly 18 percent. But Florida Blue, the state’s largest health insurer, said those rates would go even higher if the cost-sharing reduction payments disappeared.
Robert Laszewski, an industry consultant in Virginia and a frequent ACA critic, said the exchange markets aren’t imploding, despite what the Trump administration has often said. But their premiums will continue to rise unless more young and healthy people are persuaded to buy coverage, he said.
“I think most insurance companies will at least break even, or even make a profit, in 2018,” Laszewski said. “Coverage will be ‘stable,’ but it will stabilize at a horrific premium rate level.”
–Chad Terhune and Julie Appleby, Kaiser Health News
@FL Readers and Republicans too
The mad king says we’re great again:
“Are there no prisons?”
“Plenty of prisons…”
“And the Union workhouses.” demanded Scrooge. “Are they still in operation?”
“Both very busy, sir…”
“Those who are badly off must go there.”
“Many can’t go there; and many would rather die.”
“If they would rather die,” said Scrooge, “they had better do it, and decrease the surplus population.”
– Charles Dickens, A christmas Carol
Make America Good Again:
HEALTH CARE – NOW!
I never realized that self inflicted destruction was “sabotage”. I know, it’s Bush’s fault.
The gold spoon coward you elected is way over his head. The American people will not allow you to defund ACA without a replacement program. If you do, DO so at your own political peril.Hes not a year in and already a lame duck. Smh idiots.
Let it die. Obamacare will fail! It is just a matter of time. If our politicians would get together and work on a plan in unison maybe just maybe it would benefit the people. But that will never happen. These politicians only care about themselves period!
Insurance industry as usual cries wolf and keeps raising premiums, blaming “uncertainty.” Yet a new Kaiser Health study shows the insurance companies have adjusted to Obamacare quite well. Their medical loss ratio is much better than it was a year ago. They are collecting an average of $403 a month per capita from people in exchange plans, but paying out only $303 in medical claims. That’s more than twice the margin they enjoyed a year ago. Certainly that $100 a month per customer should be plenty to cover their administrative costs and marketing and still leave them with a generous profit.
Damn… that was the best chance Republican’s had to cleanse our great America of the poor, the sick and the elderly. Those 12 white guys who wrote the proposed “repeal and replace” legislation behind closed doors gave it all they had. But they failed because of three rather brave women who stood up to unbridled power and voted their consciences, voted for their constituents. Now if we can get more and more women to stand up to the crazy old white guys, maybe we’d really be great.
Thanks for the information @beachcomber! Unfortunately. . . there will NEVER be enough profits for the insurance companies!
We need to get them out of the middle, and implement something similar to Medicare. . . we would all have much lower costs and Nationwide coverage.
Having insurance coverage that differs from state to state is INSANE! Our citizens need to be able to easily move from one part of the USA to another without having their health coverage block them from a better life and employment!
Vote out all the Repubs in the house and Senate. They had 7 years to get their shit together to undo the BIG LIE of of ObamaCare. They said they needed the house, we gave it to them, said they needed the senate, we gave it to them, said they needed the presidency we gave it to them and they did not do shit. Vote them all out and replace them with more non political elites. Let Obama care wither and implode.
Sherry… “we would all have much lower costs and Nationwide coverage.” Who the hell is “we”? I thought “WE” got to keep our doctor if we liked our doctor and I thought “WE” got to keep our plan if we liked our plan. I thought “WE” were going to see the average cost go down. What the hell happened? WE aren’t happy. WE need a change.
Trump is an ignorant, divisive pig. He has to be stopped.
Joe Kenda says
yo knight, gotta say you are on the money!!
Right on Knightwatch! Also a traitor associating to sell us cheap to the communist.
@ Frederick. . . If you want REAL CHANGE. . . the insurance companies need to be OUT of the middle of our health care!
The “Republicans” in Congreaa FORCED the ACA through “FOR HUGE PROFITS” private insurance companies! Those “insurance companies” then limited the DOCTORS and PLANS you could choose to those on their “highest profit plans” and “preferred physician” list (AKA PPO). I worked for several insurances companies as an underwriter and then . . . . developing software for “preferred provider” lists. Believe me when I say, they do not choose the “best” doctors to go on their lists. . . they choose those that bill them the “LEAST”. THIS WAS NOT President Obama’s desire or choice!
President Obama and the Democrats wanted a plans similar to “Medicare for ALL”. . . but, the Congressional Republicans INSISTED on keeping the Insurance Companies in the middle! Because the “insurance lobbyist” were lining their pockets.
Get the insurance companies out of the middle and we will all save money and have much better coverage! Medicare for ALL!
I just keep watching the Trump count down and out ticker,. there is hope
Edith Campins says
This egotistical, selfish pig would rather let the AHCA fail than live with Obama’s legacy. So what if it leaves millions of Americans without healthcare, he doesn’t care. FIX the AHCA now!
KinghtW, something like Medicare-for-all will come about eventually, but we might have to endure 5 or 10 more years of repetitive debate before that happens. The debate we should be having right now is how much will the federal govt have to pay the insurance companies to take over their business. Worst case scenario is that we contract out healthcare to the private insurers, with feds doing just light oversight…sort of like the monopoly situation with our privately owned electric utilities. That will be ideal for the insurers because federal control means they never are in danger of a loss, just more profit added on. This may be the long-term game plan the Blues and other insurers have in mind. The execs will all get huge “signing bonuses” just for staying on and continuing to gouge consumers.
Sherry – if I understand you right you are saying that Obama care is the Republicans fault? LMAO….. can the liberals take responsibility for anything???
Katie Semore says
You can’t fix stupid, and it abounds here from some like it is sand on the beach.
@frederick. . . A “Public Option” was part of the original ACA bill. . . which was passed by the House. . . without support from the Republicans. But, “Independent” Joe Lieberman was the deciding vote in the Senate, and he was “bought” by the “Insurance Industry”. . . if only 1 or 2 Republican Senators had supported the “Public Option” instead of “playing politics” with the health and lives of the American people, we would ALL be much better off today. So YES, the Republicans shoved the “insurance companies” in the middle and caused the problems that we have with the ACA today!
This from the Center for Public Integrity:
While Pelosi was able to get a bill through the House with a public option provision, she couldn’t control what was happening in the Senate. Although a majority of Senate Democrats supported the public option, the industry knew it only needed one senator who caucused with the Dems to change his mind and kill it.
A senator from Connecticut, the insurance capital of the world, became the industry’s go-to guy. Insurers had spent years investing in Sen. Joe Lieberman, a former Democrat-turned-Independent. During the reform debate, the watchdog group Public Campaign Action Fund, (now called EveryVoice), called Lieberman an “insurance puppet,” noting that insurers had contributed nearly half a million dollars to his campaigns over the years.
The Democrats needed Lieberman’s vote to get reform passed, and insurers knew it. Shortly before the Senate was set to vote on the bill, Lieberman said he would vote for the bill only if the public option was stripped out.
Lieberman accused public option supporters of having an ulterior motive.
“A public option plan is unnecessary,” he told Fox News. “It has been put forward, I’m convinced, by people who really want the government to take over all of health insurance.”
In retrospect, the half a million dollars in campaign contributions might have been the best money the industry ever spent. That’s because the Affordable Care Act, for all the good it has done to expand access to health care, has, as I predicted, protected and enhanced the profits of health insurance companies. As I pointed out last month, health insurers have seen their stock prices double, and in many cases triple, since Obama signed the ACA into law five years ago.
And how trustworthy have those companies been? Not very, in many cases.
Millions of Americans who have signed up for coverage on the Obamacare exchanges are finding out that they will not get any coverage if they continue going to the doctors they’ve been going to for years.