Health Insurers' Next Affordable Care Act Scare Is Just Two Days Away

A major subsidy payment stream could end Thursday

(Photo: Diego M. Radzinschi/ALM) (Photo: Diego M. Radzinschi/ALM)

(Bloomberg) — The health insurance industry’s Affordable Care Act drama reached a climax on Tuesday, but it isn’t over.

With Senate Republicans’ failure to advance their bill to change the Affordable Care Act, insurers are facing a summer of uncertainty. President Donald Trump’s administration won’t commit to making Affordable Care Act critical cost-sharing reduction subsidy program payments. Health plans have pulled out of some markets, and raised rates in others. And there’s always the chance that Republicans could revive their effort to repeal the law.

(Related: GOP May Use Subsidy Case to Smother ACA Exchange System)

“Our members and all Americans need the certainty and security of knowing coverage will be available and affordable for them,” said Justine Handelman, senior vice president of policy and representation for the Blue Cross Blue Shield Association.

The next key moment comes in two days. That’s the date when the administration — which has threatened to let Obamacare fail — is scheduled to make its next round of monthly cost-sharing reduction subsidy payment to insurers

The cost-sharing reduction subsidy programs helps low-income people afford to use medical services. House Republicans have questioned whether the federal government has a congressional approval to make the program payments.

(Related: Insurers Mount Pressure as US House, HHS Try to Resolve ACA Case)

Analysts at Milliman have estimated the program accounted for $13.4 billion of insurers' $206 billion in individual major medical revenue from 2014 through 2016.

So far, the White House — which has threatened to halt the subsidies in the past — hasn’t committed to making the payment.

“We are still considering our options,” Ninio Fetalvo, a White House spokesman, said in an email Tuesday.

Lobbying Push

The Blue Cross Blue Shield Association said it has “consistently urged that there be immediate, certain funding for the cost-sharing reduction program.” The insurers that sell under the brand collectively cover more than 100 million people in the U.S.

For some insurers, the best way to deal with the uncertainty around the Affordable Care Act has been to back away from it.

On Tuesday, UnitedHealth Group Inc., the U.S.’s biggest insurer, showed the benefits of avoiding the political minefield the law has become. It reported second-quarter profit that beat estimates and raised its 2017 forecast after turning its business away from the individual major medical market and more toward Medicare, Medicaid and coverage sold to employers.

With Republicans in Congress reeling Tuesday from the failure of their latest Affordable Care Act exchange effort, the health care industry is facing an accumulation of “ifs.” The Affordable Care Act public exchange system still has problems. Trump has many powers at his command to undermine them further. And there’s no map and no timeline by which lawmakers might find a resolution.

‘No Clear Path’

“There is no clear path out of this,” said Robert Laszewski, an insurance industry consultant who has been critical of the Affordable Care Act. “Individual markets continue to spiral downward partly because of the inherent issues in Obamacare’s market architecture and partly because of Republican efforts to make things even worse.”

President Donald Trump (Photo: White House)

President Donald Trump (Photo: White House)

Humana Inc. and Aetna Inc. have retreated from the law, and Anthem Inc., a key Affordable Care Act exchange program player, has announced plans to quit or limit its presence in at least four states. The industry has cited the volatile politics around the Affordable Care Act as a reason for their pullback.

The next step in Congress is unclear. Senate Majority Leader Mitch McConnell proposed holding a vote to repeal Obamacare without a replacement plan, on a two-year delay. But enough GOP senators quickly said they opposed that plan to effectively kill it.

Trump Threat

Meanwhile, Trump expressed support for a plan sure to dismay insurers.

“We’ll let Obamacare fail and then the Democrats are going to come to us,” Trump said Tuesday at the White House. “We’re probably in that position where we’ll let Obamacare fail. We’re not going to own it. I’m not going to own it. I can tell you the Republicans are not going to own it.”

Kristine Grow, a spokeswoman for America’s Health Insurance Plans, another lobbying group for insurers, declined to comment directly on Trump’s threats. “We remain committed to working with every policy maker and the administration to ensure the short-term stability and long-term improvement of health care,” she said.

A third insurance group, the Association for Community Affiliated Plans, said it also wanted lawmakers to try and stabilize the ACA. “We believe there are a number of fixes needed to stabilize the individual market, such as guaranteeing funding for cost-sharing reductions and ensuring that coverage is truly affordable for consumers,” said Margaret Murray, the group’s chief executive officer.

—With assistance from Anna Edney.

--- Read Goodbye, Budget Reconciliation on ThinkAdvisor.

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