Obamacare markets are undergoing a slow-motion meltdown as Republicans stoke a climate of uncertainty while struggling to agree on their own plan for overhauling American health care.
The steady march of insurers that have announced plans to exit marketplaces in recent weeks leaves Obamacare customers in wide swaths of the country with potentially no options for purchasing subsidized coverage in 2018. In the latest and most significant blow, Anthem this week announced it will pull out of Ohio next year, leaving at least 18 counties without an insurer selling Obamacare plans.
Republicans characterize their efforts to repeal and replace Obamacare as a “rescue mission,” citing skyrocketing premiums, dwindling competition and lower-than-expected enrollment in many states. “Wave goodbye,” President Donald Trump said of Obamacare in a speech in Ohio on Wednesday, gleefully referring to Anthem’s exit. “What a mess.”
But many health care experts and insurers contend it is Republican actions over the last five months that have turned a difficult situation into an outright emergency that could knock out health insurance coverage for millions of Americans.
“There was just no way the marketplaces were in a death spiral,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. “The subsidies are too big a cushion for that to happen.”
Most significantly, the Trump administration’s refusal to commit to continue paying crucial subsidies — estimated at $7 billion for this year — has made health plans skittish about remaining in the marketplaces as crucial deadlines approach for 2018.
“There is that big elephant in the room,” said Dave Dillon, a fellow with the Society of Actuaries. “The problem is it is going to be such an impactful decision and we don’t know when it’s going to occur.”
Insurers are also nervous about mixed signals from the administration about whether it will continue enforcing Obamacare’s individual mandate, which they see as a crucial tool for encouraging otherwise healthy people to get coverage.
Hanging over the entire decision-making process is uncertainty about what’s going to happen with Republican efforts to repeal and replace the Affordable Care Act. The next two weeks will be crucial as Senate Republicans seek to tee up a vote before the July 4 recess.
Anthem cited an “increasing lack of overall predictability” as well as uncertainty about the subsidy payments as reasons for its decision.
“They were entirely saying that this is because of the uncertainty around the repeal of the Affordable Care Act … and the sabotage of the Affordable Care Act by the president,” Sen. Sherrod Brown (D-Ohio) said.
The Anthem blow was the most ominous recent development. So far, the carrier has spoken only of its plans for Ohio. But Anthem is the primary Blue Cross Blue Shield carrier in 14 states, and if it withdraws nationwide it would create turmoil in the individual market.
“Anthem is a very important player,” Levitt said. “Those plans are what is holding the marketplace together in a lot of states.”
Anthem’s announcement followed last month’s decision by Blue Cross of Kansas City to exit the Obamacare markets, potentially leaving 25 counties in Kansas and Missouri barren. Both Iowa and Nebraska also face uncertainty about whether there will be any insurers selling subsidized individual plans in those states, after the local Blue Cross Blue Shield plans and Aetna pulled out of their markets.
Some Senate Republicans concede that they’ll need to take steps to stabilize the individual market in the near term — even if they are able to push through a repeal-and-replace package. Insurers have been pushing for a program that would shield them from the cost of Obamacare’s sickest, most expensive customers. A few states, such as Alaska and Minnesota, have already taken their own steps to shore up their markets.
“We know there’s going to have to be an infusion in some form,” Sen. John Thune (R-S.D.), the No. 3 Senate Republican, said on Wednesday. “What form that takes is still kind of an open question which we haven’t settled on yet.”
But that’s not a consensus view. Sen. Richard Burr (R-N.C.) dismissed the need for funding to immediately stabilize the markets. “I don’t think the answer to reforming health care is throwing more money at it,” he said on Tuesday.
Democrats, meanwhile, are in no mood to cooperate with any kind of rescue mission if it’s tied to a repeal of Obamacare. They’re currently content to watch Republicans squirm after being on the receiving end of their political attacks for seven years over Obamacare’s shortcomings.
"Repeal’s got to be off the table,” Brown said. “We’re not going to let them use this to cap Medicaid, to undermine 20 million people getting insurance. We’re just not going to play that game.”
Insurers offer stark illustrations of how the uncertainty about the future of the Obamacare marketplaces will affect Americans’ pocketbooks. Blue Cross and Blue Shield of North Carolina recently announced plans to hike rates by an average of 22.9 percent if the cost-sharing subsidies disappear and the individual mandate goes away. If they remain in place, the average premium increase would be just 8.8 percent.
“The uncertainty that continues to exist around the [subsidies] and other components of the program have yielded a higher rate, rather than the lower rate,” said Brad Wilson, CEO of Blue Cross and Blue Shield of North Carolina. “I don’t want to get into the blame game. That’s not the point.”
In Pennsylvania, meanwhile, the state insurance department announced last week that the average rate hike for individual market plans would be 8.8 percent — a far cry from the 30 percent premium spikes this year. But if cost-sharing subsidies disappear and the individual mandate is scrapped, insurers say rates would skyrocket by 36.3 percent.
“The one big concern they have and I have is what’s happening in Washington, D.C.,” Pennsylvania Insurance Commissioner Teresa Miller, a Democratic appointee, told POLITICO, specifically citing uncertainty around the cost-sharing subsidies and the individual mandate. “It’s a big-time question mark for those companies and that’s the one thing that could end up destabilizing this market.”
Trump has reacted almost mirthfully to every stumble of the Obamacare markets, and the administration has issued press releases trumpeting the latest bad news in bruising detail. The White House apparently sees it as vindication of the need to dismantle the current system.
But polling suggests that calculation is misguided. According to Kaiser, 61 percent of Americans believe that he and congressional Republicans will be to blame for any future problems with the Affordable Care Act — twice as many as would lay the blame on Democrats and Obama.