Obamacare exploding? Maybe just a slow
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[March 25, 2017]
By Caroline Humer and Yasmeen Abutaleb
NEW YORK/WASHINGTON (Reuters) - U.S.
President Donald Trump said on Friday that Obamacare was "exploding"
after Republican lawmakers shelved legislation that would have
dismantled the healthcare law.
That's not going to happen this month. Probably not even this year.
The more than 12 million people who bought 2017 health insurance plans
on HealthCare.gov and other websites the law created are not in danger
of losing their healthcare or having their premiums go up right now,
But 2018 is another story.
Republicans could choose to pass a budget that defunds Obamacare's
cost-sharing subsidies, which help low-income people cover out-of-pocket
and other medical costs. But that would be highly unpopular among
consumers who would likely blame the president and Congress for
skyrocketing healthcare costs, experts said.
"That is one of the ways that is available to monkey wrench the
Affordable Care Act," said Morgan Tilleman, an associate with the law
firm Foley & Lardner, who represents insurers.
Obamacare, former Democratic President Barack Obama’s signature
legislation created by the Affordable Care Act of 2010, has had a tough
beginning. The mix of sick and healthy customers has been worse than
expected, and premium rates on the individual insurance market went up
25 percent this year.
Other parts of the law, like the expansion of Medicaid to enhance
coverage for the poor, and changes to allow young people to stay on
their parents' health plans, have been popular. And the defeat of the
bill is a win for the hospitals that have benefited from those increased
But many counties across the country have only one insurer, after Humana
Inc, Aetna Inc and UnitedHealth Group Inc pulled out after reporting
hundreds of millions of dollars of losses.
The insurers who are left, Anthem Inc and other BlueCross BlueShield
insurers across the country, as well as smaller players like Centene
Corp and Molina Healthcare Inc need to decide in the next few months
where to sell insurance and how much to charge.
And that is where the market's slow burn takes off, with insurers
leaving and premiums rising.
Jeff Jonas, a portfolio manager at Gabelli Funds who focuses on health
care, said that for consumers, 2018 looks uncertain, with a "death
spiral" of decreasing competition and increasing premium rates ramping
LOOKING TO 2018
After the failed Republican effort to push through the bill, insurers
are looking at changes to help 2018, America's Health Insurance Plans
spokeswoman Kristine Grow said.
That includes the market's cost-sharing subsidies as well as other
government payments for sicker-than-usual customers and finalizing a
rule the Trump administration proposed that addresses issues insurers
say drives up costs.
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Activists protest against the Republican plan to repeal Obamacare
during a rally in Freedom Plaza in Washington March 23, 2017.
The Trump administration could do some of that itself if it wants
to, such as using its regulatory authority to adjust the formula for
how it compensates insurers for the sickest people, Elizabeth
Carpenter at healthcare consultancy and research firm Avalere Health
But it is unknown if the administration will try to work within the
law's existing framework or take actions to undermine it and blame
the Democrats for its failure.
"If they fail to act and they don't act in an appropriate way, that
will further destabilize the marketplace," Dr. Mario Molina, CEO of
Molina Healthcare, said. Molina's enrollment ballooned to 1 million
exchange enrollees this year and the company is weighing if it will
submit plans for next year.
The administration could also decide to not enforce the individual
mandate, which requires that everyone purchase health insurance or
pay a fine. It already took steps to erode that provision last
month, when it backed off implementing tougher oversight that was
due to go into effect for 2016 taxes.
Experts said the individual mandate still cost less than purchasing
insurance, but as it increases each year more young and healthy
people would have incentive to join the healthcare market, helping
to offset the cost of sicker patients.
The nonpartisan Congressional Budget Office estimated that 14
million more people would be uninsured under the Republican bill
next year, with most of the increase coming from the repeal of the
penalty associated with the individual mandate.
It's unclear what the Republicans will do. Trump said this bill had
been shelved but that Republicans would end up with a "great"
healthcare bill in the future, but for now that they are moving onto
Until they do that, they will have to work within the 2010
Affordable Care Act. It can also undercut the healthcare law through
regulatory authority at the Department of Health and Human Services.
(Reporting by Caroline Humer and Yasmeen Abutaleb; Editing by Lisa
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