A day after Republicans failed yet again to repeal Obamacare, confusion sowed by President Donald Trump’s opposition to the law is roiling the health-insurance market.
In many states, insurers face a deadline of Wednesday to lock in their rates for next year under the Affordable Care Act, and some are announcing double-digit increases. Florida said Tuesday that most of its 45 percent average increase in premiums stems from the risk that the Trump administration will skip cost-sharing payments that reimburse insurers for lowering rates. California said premiums may jump by almost 25 percent on average.
Trump, who has repeatedly called the law a failure, has fostered doubt over how the federal government will run the ACA’s individual markets. The administration has cut funding for outreach and signaled it may weaken enforcement of the law’s requirement that all people have coverage or pay a fine, raising the risk that only sicker people will buy plans. Pronouncements from top administration officials that the law is collapsing could discourage enrollment.
“How many people are out there, who don’t pay as obsessive attention to this stuff as we do, might already think the law has been repealed,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms ”At the same time that you have the funding for advertising and marketing and messaging being cut, you have an increased need for it.”
About 83 percent of the 12.2 million people who picked ACA plans for this year got subsidies to help them afford coverage. The subsidies, based on the cost of a health-insurance plan, can help insulate individuals from climbing premiums. Despite its opposition, the Trump administration continued to make the payments this year.
An effort led by Republican Sens. Lindsey Graham and Bill Cassidy to repeal parts of Obamacare and cap Medicaid spending collapsed on Tuesday for lack of support. Republicans said they would keep trying, with Trump tweeting encouragement. The ACA, which in addition to subsidies expanded Medicaid eligibility to more poor individuals, helped about 20 million people gain coverage.
Meanwhile, Lamar Alexander, the Tennessee Republican who leads a key Senate health committee, said on Tuesday that he’s resumed exploring bipartisan ways to shore up the market and limit premium increases for next year. An earlier effort he spearheaded with Democrat Patty Murray of Washington state was sidelined by the renewed repeal push. A likely compromise would fund cost-sharing reduction payments while giving states more flexibility to set their own insurance rules.
Dave Dillon, a fellow of the Society of Actuaries, estimated that baseline premiums will climb 10 percent to 25 percent. A failure to ensure the payment of cost-sharing reduction subsidies would lead to an additional 15 percent increase, he said. Florida’s average monthly premium will rise to $671 from $463, the state said Tuesday.
Insurers have also pushed for a repeal of the health-insurance tax, and they’ve said a reinsurance program, which would help providers bear the cost of sick individuals, could help reduce overall costs. Both proposals are expensive, and neither is likely to be included in a short-term bill.
“The way that President Trump could be an immediate hero is to pay the subsidies for next year and demand that companies lower their rates, because most companies have raised rates because of the uncertainty,” said Kathleen Sebelius, who led the Department of Health and Human Services in the Obama administration. ”You could actually have rates drop across the country before open enrollment dramatically and claim victory.”
California has said it plans to decide by the end of the month whether to let insurers charge higher rates to account for uncertainty over the cost-sharing reductions. The higher increase is about double the 12.5 percent increases the companies requested.
Kaiser Permanente is increasing rates about 3 percent to 7 percent in California, its main market, so long as the payments are made. That’s far lower than the premium boosts it requested in its other markets, such as Maryland, where it was 23 percent.
Bernard J. Tyson, the health system’s chief executive officer, said some of the states where Kaiser Permanente is raising rates have characteristics of “an unstable market.” Kaiser Permanente has about 1.5 million customers in Obamacare exchanges nationally. As other insurance carriers exit the marketplaces, Kaiser attracts customers with greater medical needs, prompting rate increases, he said.
Higher prices also discourage healthy customers, Tyson said, creating a “vicious cycle” of rising premiums and deteriorating risk pools with fewer and fewer healthy customers. Greater certainty from Washington would get other insurers to return to the markets, he said.
“If we can solve to those problems, I am positive that they will get back into the market,” he said.
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