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Making oft-bashed PPACA blend in is administration's goal

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(Bloomberg) — As hopeful Republican successors promise to repeal President Barack Obama’s massive health care overhaul in their campaigns, his administration is looking for ways to make the Patient Protection and Affordable Care Act (PPACA) exchange system blend in with the rest of the U.S. health system.

Gone are some of the extraordinary measures used to overcome early stumbles and get people signed up for the national program to increase coverage. In their place, the administration is emphasizing stability and efforts to make the controversial program resemble any other insurance marketplace.

“Obamacare is saving lives and it’s saving money,” Obama said Thursday in Milwaukee in a speech defending his signature program. “People like what we’ve done, the people who are actually using it.”

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The fate of PPACA is a major point of contention in the presidential campaign. Republican contenders Donald Trump, Marco Rubio, Ted Cruz and John Kasich insist they will dismantle Obamacare. On the Democratic side Hillary Clinton has supported it, and Bernie Sanders has endorsed a bigger role for government. About 12.7 million people have signed up for individual plans in the law’s third year of providing coverage.

The government recently made it harder for individuals to enroll in PPACA plans outside the normal sign-up period, a change that benefits insurers because it reduces the possibility that people will wait to buy plans until they’re sick. The federal government also backed off plans to impose tighter standards on insurers’ networks of doctors and hospitals, though it will give enrollees an indication of how broad each insurer’s network is.

Sustainable market

“These are improvements that you would expect to happen regularly in a mature program,” said Larry Levitt, a senior vice president at the Henry J. Kaiser Family Foundation. “The operations have kind of normalized, but there are still lots of political uncertainties swirling in the background.”

About 20 million Americans have gained health coverage under PPACA, including Medicaid enrollees and children allowed to stay on their parents’ plans, Obama said in the speech. The Centers for Medicare & Medicaid Services (CMS), which oversees the program, is focused on ensuring that the marketplace that will remain sustainable, said Andy Slavitt, the agency’s acting administrator. His discussions with insurers suggest that the agency is moving in the right direction, he said.

“A lot of the companies are viewing that they now can put together strategies that help them succeed,” he said Monday in an interview.

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Most insurers will probably continue to sell health plans through the PPACA exchange system next year, Slavitt said. The government will get a look at insurers’ plans in the comings months as they begin submitting 2017 offerings and premium rates.

Balancing act

“They’re actually now at a point where, whether they are having losses or not, they’re figuring out how they can put together a winning strategy to succeed in the marketplace,” Slavitt said. “We expect to see stability, predictability in the marketplace.”

One of PPACA’s goals is for its exchange system to offer consumers a choice of quality health care plans. At the same time, many insurers lost money in PPACA’s early years, and program administrators have to keep these companies motivated to participate in the markets, too.

“They’re walking this tightrope, and sometimes they lean towards the carriers, and sometimes they lean towards consumers, but it is a balancing act,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms.

Big publicly traded companies like UnitedHealth Group Inc. (NYSE:UNH) and Aetna Inc. (NYSE:AET) have said they’re assessing their plans for next year, after posting 2015 losses on the policies. Blue Cross and Blue Shield of North Carolina, which is dominant in that state, has also said it’s re-evaluating its approach.

Making money

“The vast majority of insurers are going to stick this out and will eventually make money,” Kaiser’s Levitt said. “But no insurer is going to stick around if they’re perpetually losing money.”

Insurers need predictable rules to figure out how much they’re likely to pay for medical costs and set their premiums to account for that, Levitt said. They also need data on the health status and costs of covering individuals enrolling in PPACA exchange plan coverage, and that is accumulating annually.

“We’re evaluating all these proposals on whether it advances stability in the market and affordability for consumers,” Greg Gierer, vice president for policy for America’s Health Insurance Plans (AHIP), an industry group, said by phone.

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