For insurers, stalled ACA repeal doesn't remove uncertainty

Signs saying healthcare reform
The insurance industry has repeatedly said that without funding for the cost-sharing reduction program, the individual marketplaces could collapse. (Getty/Eugenia Chaikina)

Though the threat of an Affordable Care Act repeal has faded, policy uncertainty continues to loom over health insurers that sell plans in the individual marketplaces.

The most immediate concern is the possibility that the latest round of cost-sharing reduction payments won’t be sent to insurers to help them defray ACA exchange enrollees’ out-of-pocket costs.

The deadline to send out those payments is Thursday, but President Donald Trump appears to be leaning toward ending the subsidies, Politico reports. The White House’s official position is that it isn’t yet decided what to do about CSRs.

Adding credence to this threat is Trump’s public statements following the collapse of the Senate’s Better Care Reconciliation Act and GOP moderates’ resistance to a repeal-and-delay plan. “I think we’re probably in that position where we’ll just let Obamacare fail,” he said Tuesday.

RELATED: Trump suggests letting ACA fail, but McConnell vows vote on repeal-and-delay in 'near future'

The CSR payments—estimated to total $7 billion for fiscal year 2017—are at the center of a lawsuit first brought by House Republicans against the Obama administration. A judge previously sided with the plaintiffs and ruled their funding is unconstitutional, but the Obama administration appealed and the case is on hold as the Trump administration decides how to handle it.

The insurance industry has repeatedly said that without funding for CSRs, the individual marketplaces could collapse—and the lack of certainty about the payments had made it difficult for insurers to decide about plan pricing and participation for 2018. To compensate, some have asked for steep rate increases.

In fact, the Kaiser Family Foundation has estimated that premiums for silver plans would rise by 19% next year if the CSR payments are withheld.

The BCRA would have continued funding for the CSR program through 2019—offering insurers at least a temporary reprieve—but with its demise, the issue of their funding is once again top of mind for insurers.

“With open enrollment for 2018 only three months away, our members and all Americans need the certainty and security of knowing coverage will be available and affordable for them,” Justine Handelman, senior vice president of policy and representation for the Blue Cross Blue Shield Association, said in a statement.

To achieve that, the group called upon federal and state lawmakers to stabilize the individual markets in the short term—via “immediate, certain funding” for the CSR program and “dedicated funding to care for those with significant medical needs”—while also working on permanent solutions.

Ceci Connolly, CEO of the Alliance of Community Health Plans, also stressed that ensuring funding for CSR payments is the most immediate concern.

“These subsidies are vital to maintaining a stable individual market, and both families and plans need to have certainty that they will continue to be there in coming years,” she said in a statement.

Yet Trump may not be the only one resistant to ensuring the CSRs are funded. In a speech on the Senate floor Tuesday, Finance Committee Chairman Orrin Hatch, R-Utah, both acknowledged that an “insurance bailout” is likely and questioned where such money would come from.

“Those who will be interested in moving an insurance bailout later this year should be ready to explain how they want to pay for it,” he said.

What about the individual mandate?

Another factor contributing to uncertainty for insurers is whether the government will continue to enforce the ACA’s tax penalty on those who choose to forgo health insurance.

The individual mandate—though unpopular—is a key stabilizer of the individual market’s risk pool, since it compels younger and healthier individuals to enroll and balance out older, sicker ones.

The Senate’s repeal-and-replace bill would have repealed the individual mandate and replaced it with another incentive to stay insured—a re-enrollment waiting for those who have a lengthy gap in coverage.

Now, insurers may have reason to worry that the Trump administration will take steps to weaken enforcement of the mandate.

In a letter to top Trump administration health officials earlier this month, America’s Health Insurance Plans urged them to continue enforcing the individual mandate. If the administration doesn’t enforce the law, the group said, “costs will increase while choices will decrease because fewer younger, healthier people will be incentivized to get coverage.”

What Congress might do regarding the provision is also a concern. Earlier this month, a House committee released an appropriations bill that contains provisions designed to hamper the Internal Revenue Services’ enforcement of that ACA provision.

The intent, said Rep. Tom Graves, R-Ga., is to “provide relief for the families suffering under Obamacare.”

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