ACA uncertainty could spur insurers to abandon marketplaces by 2018

Exit sign
Photo by John Spannos / Getty Images

Uncertainty surrounding the GOP’s transition plans following a repeal of the Affordable Care Act could lead many health insurers to exit the individual marketplaces once 2017 ends.

Although President-elect Donald Trump has softened his stance on an outright repeal of the ACA, GOP lawmakers are still divided over whether to take the long-awaited step of immediately dissolving President Barack Obama’s landmark legislation or adopting a more gradual transition.

But even a transition period would cause “massive disruption and chaos” to the individual market, prompting insurers to announce that they will exit the exchanges as early as next year, according to a report from the Center for American Progress (CAP).

Earlier this year, Obama vetoed a bill through the budget reconciliation process that would have repealed significant portions of the ACA, including the individual mandate and federal premium subsidies. The CAP report notes that those provisions serve as “essential carrots and sticks,” and eliminating them could cause a death spiral by driving healthy patients out of the marketplaces altogether.

But even the prospect of a repeal—or a reconciliation bill with a delayed effective date—would disrupt existing markets. The federal government announced earlier this month that insurers must file proposed premium rates by May 3. If there is still uncertainty surrounding the individual marketplace, payers are likely to pull out altogether, the report says.

Repeal by reconciliation would have disastrous consequences "much sooner than congressional Republicans expect and well before any replacement plan is in place," Topher Spiro, VP for health policy at CAP, said in a statement. "If congressional Republicans pass a repeal bill that kicks the can on replacement, they will own the effects in 2018 when insurers drop out due to uncertainty.”

Even before the election results were finalized, major insurers like Aetna and Humana pulled out of many exchanges due to financial uncertainty and uneven risk pools. Earlier this month, Anthem CEO Joseph Swedish hinted that the insurer might limit its marketplace participation going forward. However, as of Wednesday, more than 1 million people had signed up for health insurance through for 2017.