Obamacare uncertainty may mean higher insurance premiums
By NBC News
President Donald Trump and Republicans in the House may be celebrating their victory in a bill that reverses big parts of Obamacare, but the vote may mean premiums go up even higher next year, experts predict.
Key senators have already said they'll tear up the House bill and start all over again, and the debate has created one thing insurers hate above everything else: uncertainty.
And that means they'll either raise premiums a lot, or completely pull out of the so-called Obamacare markets, health insurance specialists say.
"The biggest problem we have is uncertainty. Insurers hate uncertainty," Brian Webb, manager of health policy for the national Association of Insurance Commissioners, told a briefing on Capitol Hill Friday.
Health insurance companies were supposed to announce their planned 2018 premiums this month. They've gotten an extension until July 17 because of all the Obamacare repeal back and forth, but that is the latest they can wait.
And with the Senate unlikely to pass the House version of the American Health Care Act, insurance companies have no idea of whether they will get federal subsidies to help cover people on the so-called individual market — the people buying Obamacare plans. Insurance companies also have little idea of who will be eligible to enroll in these plans, given the changes that could be coming.
The Obamacare policies only cover about 8 percent of Americans. But the fight over the markets is having a disproportionate effect, politically.
"This is a small market, but it really is the tail wagging the dog in our system," said Karen Pollitz of the nonpartisan Kaiser Family Foundation, which does health policy research.
Webb worried about "months and months and months of discussions" while insurance companies are trying to figure out what they can offer and what to charge for their plans.
"They'll be adding in rate increases ... or get out," Webb said.
It's higher premiums that made voters angry in the first place. And insurers have dropped out of many Obamacare markets across the country, saying they cannot make a profit.
President Donald Trump has repeatedly called Obamacare a failure. GOP members of Congress have, too, saying it costs too much and doesn't offer enough choice.
"Seven years in, the so-called 'Affordable Care Act' continues to let people down. Patients want reform, stability, and access to quality and affordable health care," Republicans leading the House Energy and Commerce committee said Friday.
But the lack of a clear path forward could make things even worse, Webb and other experts told the briefing, sponsored by the Alliance for Health Reform.
"Continued uncertainty could lead to more insurer withdrawals," said Cori Uccello, senior health fellow at the American Academy of Actuaries. "The market itself is still fragile," she added. "Insurers need to know if they are going to get paid."
Congress has not made a decision on payments called cost sharing reductions. The Affordable Care Act created health insurance exchanges, where people who could not get good health insurance any other way could buy individual policies, usually with a hefty government subsidy.
Insurance companies offering policies on these exchanges must limit co-pays and deductibles that patients have to pay, with the promise that the federal government will pay them back.
Deep Banerjee, director of life and health insurance at financial services company Standard & Poor's, said health insurance premiums "always" go up in all markets — but they'll rise considerably if companies don't think they'll get paid back for these subsidies.
"If (cost sharing reductions) are not taken care of, we will see 20 percent again," Banerjee said.
And they'll rise because the U.S. has by far the costliest health care in the world per capita, and the new bill does not address that issue at all. "Very little is being done towards the actual fundamental cost of care," Banerjee said.
Webb said Maryland is the only state whose insurers have set their rates for 2018 and they'll be raising premiums by 15 percent to 22 percent. "That may give you a first early indication of what we'll see. Rates will rise even more because of the annual increase in medical costs," Webb told NBC News.
The uncertainty is discouraging, because three years into the markets, they were starting to settle down after a rough first two years, the experts agreed.
"The market is stabilizing," said Pollitz of the Kaiser Family Foundation. "I think insurers are getting the hang of it," she added. "We aren't in a death spiral."
Insurance companies, which were losing money in many states, were just beginning to break even, Banerjee added.
As if that wasn't enough, another factor is making health insurance companies nervous — the mandate. Trump has made clear his administration will not strongly enforce the Obamacare requirement that just about everyone have health insurance or pay a tax.
The idea was to make healthy people get insured so a good mix of healthy and sick people are paying premiums.
Insurance companies are adamant about the mandate. If they are going to be required to cover all people who apply for coverage, if they cannot cap coverage once people's care starts getting expensive, and if they cannot refuse to cover certain pre-existing conditions, then they want a wide customer base.
The GOP plan would do away with the mandate but its framers say that policies would be cheaper and with more choice, so younger and healthier people would buy them.
But without a strong mandate, or something to replace it, premiums will rise by 15 percent to 20 percent, Pollitz predicted.
"Since the election, there is a new political x-factor," Pollitz said. "It is pretty clear insurers are going to have to start all over again."