Insurers uncertain as Congress looks to repeal Affordable Care Act

Washington – Caught off guard by the political changes that make possible the repeal of the Affordable Care Act, the nation’s insurers are hoping Congress will replace the health care law with something that allows them to stay in business – and even thrive.

“The discussion right now about repeal and replacement is making the [insurance] market very, very nervous,” Washington Insurance Commissioner Mike Kreidler, a Democrat, said at a press conference last week.

But the elimination or loosening of ACA regulations on health insurers, who before the heath care law could deny coverage or charge higher rates to sicker patients, could bring them big benefits.

Wall Street has reacted to that possibility. Stock prices of the big insurers, including United Healthcare, Aetna, Humana, Cigna and Anthem are surging after Donald Trump won the election, giving Republicans a chance to repeal the ACA.

Jonathan Gruber, a professor of economics at the Massachusetts Institute of Technology and a consultant to the Obama administration on the ACA, said big health insurers – especially Aetna and United Healthcare – have been disappointed because they did not make the money they had expected from the health care overhaul.

“But they’d rather fix it than scrap it,” he said.

At a recent business conference in New York, Aetna CEO Mark Bertolini said he did not anticipate Trump’s election to the White House and had no plans for a repeal of the ACA.

“If you were to look at our game board of all the possible outcomes of the election, this one wasn’t even on the sheet,” Bertolini said.

In his opening statement in the Anthem-Cigna antitrust trial this week, Christopher Curran, the attorney for Anthem, said,  “The election only added to the uncertainty in the commercial health insurance business.”

Kristine Grow, spokeswoman for America’s Health Insurance Plans, said it’s too soon to react to plans to repeal and replace the ACA. “We need to know what the proposals are,” she said.

One thing is certain, however. Smaller companies like Centene and Molina have made a lot of money from the ACA’s expanded Medicaid business and stand to lose a lot if conditions change, Gruber said.

It’s not clear how Congress would repeal the ACA and what a replacement would look like.

The best blueprint comes from House Speaker Paul Ryan, R-Wis., who proposed a 37-page plan that would eliminate the mandate to purchase insurance but offer tax credits to help individuals and families buy coverage.

Ryan’s proposal also would protect people with existing illnesses and medical conditions against being dropped by their health plans.

But Ryan’s plan would not guarantee that those with pre-existing conditions who lose their current coverage would be able to purchase an affordable plan. Insurers may be able to deny those with pre-existing conditions coverage or charge exorbitant premiums.

Under Ryan’s plan, insurers would also be able to offer plans that are much less comprehensive than those mandated by the ACA.

People signing up for insurance in the Affordable Care Act’s exchanges right now won’t experience any changes in coverage next year, nor will they lose their subsidies. But after that, there’s a lot of uncertainty.

Iowa Insurance Commissioner Nick Gerhart, a Republican appointee, said repealing the ACA with no replacement would have “devastating consequences in the disruption to people’s care.”

Connecticut’s insurance commissioner Katharine Wade has not yet weighed in on the impact of an ACA repeal.

“It’s premature at this point,” said Donna Tommelleo, spokesperson for Wade’s department. “We are monitoring the situation.”

Deep Banerjee, an insurance analyst with Standard & Poor’s Global Ratings, said repeal and replacement of the Affordable Care Act would affect the insurers’ individual market the most. This market  has grown because of the ACA’s mandate and subsidies.

“Close to nine million people have used the subsidy to buy insurance,” he said.

Next in line, as far as impact, are the insurers that benefited from Medicaid’s expansion. Banerjee said. Congress is likely to turn an open-ended program – one that covers everyone who is eligible – into block grants that will limit eligibility.

“These companies will hurt because they have no area to grow,” Banerjee said.

Insurers selling Medicare Advantage policies also may be affected by changes in that program. “But we think that may not be the top priority [in Congress], and seniors are an important constituency,” Banerjee said. “Change would be improbable.”

He said the group insurance market would be the least affected by the end of the ACA.

Banerjee also said the new Congress and administration might scrutinize how the government finances health care.

“All forms of health care will be under the microscope,” Banerjee said.

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