- Win McNamee/Getty Images
Obamacare’s insurance exchanges are facing a big day Wednesday.
June 21 marks the deadline for insurance companies to indicate interest in the Affordable Care Act’s individual insurance exchanges for 2018, submitting their first proposals for individual insurance offerings next year.
Insurers’ actions at the deadline represent a barometer for the health of the market.
Insurers’ decisions could affect insurance coverage and healthcare costs for the more than 10 million Americans currently enrolled in the marketplaces.
Perhaps most significant, insurers will need to decide on their participation. If insurers abandon the markets, it could lead to a worst-case scenario in which a large swath of the US faces the reality of having no insurer in the market for those lacking coverage through their employer or a government program like Medicare.
Cynthia Cox, the associate director at the Kaiser Family Foundation, a nonpartisan health-policy think tank, said states could persuade insurers to enter the market later even if there were counties with no insurers for the individual market after Wednesday’s deadline.
“It’s theoretically possible the administration could be flexible with the deadline if there isn’t sufficient interest in a given state,” Cox told Business Insider in an email. “There is also still time for insurers to negotiate on rates and participation within states. Insurers have until early fall before they have to commit one way or the other.”
So far this year, there has been a slew of bad news for the exchanges in terms of insurer participation. The large, publicly traded insurer Aetna ditched all of its Obamacare business in May, and Anthem pulled out of Ohio, leaving up to 20 counties in that state without an insurer for their individual exchange next year.
Another factor to watch is the size of premium increases that insurers request.
Large premium hikes over the past few years have been a political flash point, with President Donald Trump railing against them during the 2016 presidential campaign.
While many health-policy experts said the steep rate hikes in 2016 were a one-off to correct for previously underpriced plans, recent indications from state-run exchanges have predicted even higher premium increases even as many insurers near profitability.
“Last year’s rate increases were roughly enough to get premiums back to a sustainable level, and in a stable policy environment, the market would have been poised for a return to more moderate increases this year,” said Matthew Fiedler, a fellow with the Center for Health Policy in the Brookings Institution’s Economic Studies Program. “But actions by the administration and Congress around the mandate and CSRs have made that impossible.”
The future of the individual insurance landscape under the Affordable Care Act has never been murkier, with Congress nearing a repeal-and-replace bill for the ACA.
The Trump administration has been extending CSRs, or cost-sharing reduction payments, on only a month-by-month basis. CSRs are government payments to insurers designed to offset the cost of offering reduced out-of-pocket payments to low-income Americans. The White House’s refusal to commit to the CSRs indefinitely has left insurers without a guarantee the payments will continue.
It is also unclear whether the administration will maintain the mandate that all Americans purchase health insurance, another feature of the Affordable Care Act designed to offset costs to insurers.
“Without clarity on cost-sharing subsidy payments and individual mandate enforcement, insurers are making a variety of assumptions, in some cases raising rates by 20 percentage points or more above what they otherwise would have,” Cox told Business Insider.
For instance, Blue Cross Blue Shield of North Carolina asked for a 22.9% increase for 2018 but said it would have asked for only an 8.8% increase if it were given clarity around the CSR payments.
According to Fiedler, insurers have gotten more transparent in their reasons for cost increases. At first they merely cited “uncertainty” as reasons for the premiums hikes, but recently insurers in states have broken out exactly how much the CSR issue has driven up the costs.
“In terms of insurers’ posture, there has been a shift in insurers’ posture in recent weeks toward highlighting the role of policy uncertainty in driving their requests for large increases,” Fiedler said.