Payers wary of ACA marketplaces amid regulatory flux

Health insurance, pen and stethoscope
The lack of a clear replacement for the Affordable Care Act in the event of a repeal has left an uncertain regulatory future for payers. (Getty/Minerva Studio)

As Republicans move toward a repeal of the Affordable Care Act, many insurers are unsure whether it's feasible to continue to participate in the individual exchanges next year given the uncertain regulatory environment, according to a new report.

The report, produced by the Urban Institute, explores how insurers are likely to respond to an ACA repeal, based on interviews with a range of companies that participate in the exchanges. Should the healthcare law’s individual mandate be repealed immediately without an effective replacement in place, it’s likely that, at minimum, premiums would increase significantly to make up for a sicker risk pool, according to the report.

Many insurers would also likely “seriously consider” withdrawing from the marketplaces in 2018 if the individual mandate is rolled back without a replacement, according to the report. Insurers are contractually obligated to remain in the marketplaces this year, but if cost-sharing reduction payments are reduced for 2017, many believe they would be forced to exit the marketplaces or even the entire individual market as quickly as they could under state and federal law.

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A “repeal and delay” approach would likely destabilize individual markets, according to the report. Insurers see value in having a buffer period to adjust to new regulations under a replacement plan, but the lack of a clear direction for what comes after a repeal of the ACA is the most worrying. They see significant risk in staying in marketplaces while plans for an ACA replacement remain in flux.

“We find that so long as policymakers enact concrete replacement policies and provide the insurance industry significant time to implement them, insurers are generally confident that they could manage a transition to a new regulatory regime,” according to the report. “However, if the ACA is repealed after a delay but not concurrently replaced, or if the individual mandate is immediately ended, insurers expect material market exits and significant premium increases in 2018.”

Both the House and Senate have already passed fast-track budget resolutions that would repeal key parts of the ACA. Republicans have not yet decided on a concrete replacement plan but have floated ideas such as reviving high-risk pools, creating Medicaid block grants and emphasizing health savings accounts. President Donald Trump, meanwhile, has said he wants to ensure “insurance for everybody."