What now? Health insurers still face uncertainty after AHCA's demise

Signs saying healthcare reform
Though the Affordable Care Act remains the law of the land, some insurers want to see changes made to ensure the individual markets function properly. (Getty/Eugenia Chaikina)

Now that the American Health Care Act is officially off the table, health insurers that had been bracing for a major policy overhaul are once again left to figure out how to thrive under the old rules of the game.

Right before the AHCA was set to go up for a vote on the House floor Friday, Republican leadership decided instead to pull the bill, as they failed to win over enough right-wing GOP lawmakers to pass it.

With the Affordable Care Act in place for the foreseeable future, it “sharpens the focus” of insurers’ evaluation of whether they want to participate in the individual marketplaces next year and how to price their plans, Sandi Hunt, a principal at PwC, said in an interview.

“It means they’re going to have to sit down on Monday and really evaluate—OK, the world is not going to change now, let’s figure out how we want to proceed with that set of circumstances,” she said.

Ceci Connolly, president and CEO of the Alliance of Community Health Plans, noted that some factors may still make that difficult for the insurers she represents.

“Our nonprofit plans are committed to serving their communities but need clarity in order to make sound business decisions before the June filing deadline,” she said in an email. “ACA subsidies, reinsurance and risk adjustment must all be in place to ensure a functioning market.”

The future of one type of ACA subsidy—cost-sharing reduction payments—is of particular concern, as a federal judge ruled in a case brought by House Republicans that the funding for CSRs was illegally appropriated. The Obama administration appealed the decision, but the case had been put on hold since President Donald Trump took office.

For its part, America’s Health Insurance Plans had asked policymakers to fund CSRs through at least until 2019—a suggestion recently echoed by Anthem CEO Joseph Swedish.

Following news of the AHCA’s demise, AHIP spokeswoman Kristine Grow said the group looks forward to collaborating with policymakers and regulators on making improvements to the exchanges.

“Americans deserve a strong, stable individual market that delivers affordable coverage and access to quality care,” she said in an email. “We remain committed to working with Congress and the administration in a bipartisan fashion on solutions.”

What’s in store for Medicaid managed care

Perhaps one of biggest impacts of the AHCA would have been the changes it proposed for Medicaid, which the Congressional Budget Office estimated would have cut $880 billion from the program over 10 years.

Those funding cuts and the sunset of Medicaid expansion would have had major implications for insurers like Molina and Centene, which have both seen their managed care business lines boom under the ACA. Indeed, those two companies are the “clearest winners” now that the ACA is staying put, Leerink Partners analyst Ana Gupte wrote in a research note.

But the fact that the ACA is still intact does not necessarily mean that some changes are not in store for Medicaid. Already, Centers for Medicare & Medicaid Services Administrator Seema Verma and Department of Health and Human Services Secretary Tom Price have signaled to governors that their agencies will encourage states to experiment more with their Medicaid programs—especially conservative policies, like work requirements, that the Obama administration scuttled.

In fact, 1332 and 1115 waivers under the ACA already give states “a lot of flexibility” under the current rules, Hunt said. “So I could see those plans taking a closer look at what they think is working and not working, and work with the states to try to structure the plans in ways that they think would be better,” she said.