Insurers: Repeal of ACA should go slowly, keep subsidies awhile

Washington – As Republicans in Congress begin work on a repeal of the Affordable Care Act, the nation’s health insurers are telling lawmakers to keep paying subsidies to the companies and to low-income Americans so they can afford coverage.

Insurers also want Congress to create a long transition period before the ACA is eliminated and a GOP plan replaces the health law.

“Changes can either begin a stable transition to a better approach, or they can bring about even more uncertainty and instability,” said Marilyn Tavenner, who heads America’s Health Insurance Plans (AHIP), in a recent op-ed.

AHIP, the national trade association for the health insurance industry, has become the public voice for the nation’s major insurers, who are tight-lipped about the upheaval that repealing the ACA would bring their companies.

Tavenner said, “It is also clear that certain parts of the ACA have not worked as well as intended,” especially in the marketplace for individuals who purchase their own insurance.

The state insurance exchanges attracted customers who were older and sicker than expected, costing insurers losses that prompted them to abandon the exchanges and leading to a sharp increase in premiums this year.

Craig Garthwaite, co-director of Kellogg’s Health Enterprise Management Program at Northwestern University, said Republican fervor about repealing the ACA already has caused a lot of uncertainty in the insurance market.

Insurers must file their rates for 2018 with state insurance departments this spring, amid uncertainty about the future of the state exchanges.

“If the exchanges collapse with no replacement, 13 million people who get their coverage there will be uninsured,” Garthwaite said.

A delayed repeal of the ACA could keep the exchanges functioning until a replacement is in effect, but the key is to stabilize those markets, Garthwaite said. He said despite premium hikes and the exiting of insurers like Aetna and United Healthcare from the exchanges, “the ones who have remained are doing better.”

That’s because the insurers that remain have more experience selling policies to individuals, while Aetna and UnitedHealthcare have placed more focus on large group policies, Garthwaite said.

Anthem, Centene, Oscar and Blue Cross and Blue Shield plans are largely staying on exchanges in 2017.

Garthwaite also said that on day one of his term of office, President-elect Donald Trump could take a step to stabilize the exchanges – by using his executive authority to continue to fund a cost-sharing program that helps low-income people pay for deductibles and co-payments.

But congressional Republicans have put that program in the crosshairs with a lawsuit. They won a decision on the suit in a lower court, and it’s is under appeal by the Obama administration.

In a letter to House Majority Leader Kevin McCarthy, R-Calif., Katharine Wade, the head of the Connecticut Department of Insurance, listed several things that could stabilize the insurance market, including allowing “more flexibility” in  the coverage insurers are required to provide and the elimination of certain “regulatory redundancies.”

More help for insurers

In their repeal of the ACA, GOP lawmakers are expected to eliminate a mandate that nearly everyone have insurance, which gave insurers more customers and larger risk pools.

Despite the loss of that help, Tavenner said, there are ways to keep some of the aspects of Obamacare that people like, without plunging insurers into a downward spiral, including the ban on denying coverage to people with pre-existing conditions.

To do so, she said a replacement for the ACA must have incentives for people to have continuous coverage, such as waiting periods and penalties for those who have had a break in coverage.

“Such continuous coverage incentives could go a long way to avoiding even higher premiums and fewer choices for everyone,” she said.

Cynthia Cox, associate director for health reform and private insurance at the Kaiser Family Foundation, said Trump could use his authority to tighten up enrollment periods so people don’t game the system by purchasing insurance only after they are sick or injured.

“That could be done fairly quickly,” she said.

AHIP also is lobbying Congress to continue subsidies for low- and moderate-income individuals to purchase insurance and federal help for insurers that enroll high-risk people, at least until Jan. 1, 2019.

The problem with those proposals is that they have been key targets of the GOP, which has opposed federal subsidies for individuals and for the insurance industry.

The ACA has tried to stabilize the industry through “transitional programs” that are aimed at protecting the industry from the unknown risks of the new marketplaces they have entered.

One federal safety net is reinsurance, or payments to plans that enroll higher-cost individuals. Under the ACA, the program was to end last month, but the industry wants it to continue for at least a couple of more years.

“There is no question that this funding is contentious,” Tavenner said. “But it is essential to deliver stable plan options and predictable premiums until a replacement plan can be designed, developed and deployed.”

Another help to the industry was “risk corridors” established by the ACA that took money from plans that are doing well and gave it to plans that weren’t.

The program, which ended last year,  was aimed at protecting insurers against inaccurate premium-setting during the initial years of the ACA. But the money coming into the fund was less than was promised.

Republicans say efforts to use taxpayer money to bolster the fund amounts to “corporate welfare.” Cox said risk corridors and other programs designed to stabilize markets could be restructured so that only insurers pay into the plan.

“You can structure it so that no federal money is used,” she said

It’s too early to determine whether the industry’s proposals will be incorporated in the effort to “replace and repeal” the ACA.

Four congressional committees, two in the House and two in the Senate, have just been tasked to come up with a repeal plan before Inauguration Day, Jan. 20.

Sen. John McCain, R-Ariz., who does not sit on any of the panels at work on a repeal, told reporters this week he doesn’t care what insurers think at all.

“Insurance companies are the people who signed up to Obamacare. They have no relevance to me. I don’t want to hear from ’em,” McCain said.

He said if Congress passes a law, insurers “have to obey it,” but “they are not at the table negotiating,” and he’s “not interested in hearing their recipes for fixing (the ACA).”

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