ACA Reforms Could Replicate Old Problems for Health Insurers, Observers Say
Affordable Care Act reforms proposed by congressional Republicans represent a mix of measures that may stabilize the health care market for the near term while replicating the ACA's actuarial problems that created significant financial headwinds for carriers, observers said.
"It's premature, but the initial indications appear to be a mixed bag," Ceci Connolly president and chief executive officer of the Alliance of Community Health Plans said.
"The situation is moving in the right direction for 2018-19," Connolly said, "but we would need to see legislation enacted that keeps the subsidies and a little more clarity on reinsurance and risk adjustment."
Observers agreed it was difficult to predict the overarching impact of the reforms. The short-term prognosis was upbeat, but the legislation includes elements that could pose substantial hurdles for long-term market stabilization.
Two U.S. House committees last week passed legislation to repeal the ACA and replace it with a Republican version that would keep some of the most popular elements (Best's News Service, March 9, 2017).
The bills would extend the consumer subsidy programs, the advance tax credits and the cost-sharing reductions, until the end of 2019. That helps to stabilize the market in the near-term, Connolly, told Best's News Service. However, the bills are silent on how to pay for those provisions.
"They deserve credit for hearing our message around stabilizing the market and not creating chaos for millions of Americans that are getting coverage and care," Connolly said.
However, there are significant questions for 2020 and beyond, when the ACA consumer subsidies will be replaced with less-generous tax credits and the federal spending on the Medicaid program will be sharply decreased (Best's News Service, March 7, 2017).
"It looks as if the tax credits will be insufficient and the Medicaid proposal looks to significantly reduce the money for the health care of the most vulnerable populations," Connolly said.
Under the ACA, insurers were compensated through three premium stabilization programs that helped offset the costs of enrolling sicker and more costly patients. Republicans have criticized those programs. Instead the replacement plan would allow carriers to penalize enrollees with a 30% premium surcharge if they experience a gap in coverage greater than 63 days.
That may not be enough, said Merrill Matthews, resident scholar at the Institute for Policy Innovation, an independent, nonprofit public policy research organization. The GOP plan could just repeat the same ACA mistakes, he said.
"Instead of letting health insurers do what insurers do underwrite Republicans are retaining Obamacare's guaranteed issue provision," Matthews told Best's News Service.
And, it's unclear that the premium surcharge, which taxes both the healthy and less healthy enrollees the same, will work as an incentive to overcome the lack of medical underwriting.
"Let's say an uninsured enrollee's normal premium is $500 a month," he said. "That works out to $650 with the penalty. The person could pay the premium for a couple months, have the surgery and then drop the coverage.
"So they pay an extra $150 for a few months but wind up saving thousands of dollars by remaining uninsured for years," he said.
And, the surcharge is not a great incentive for young people to obtain coverage, said Angela Mattie, professor and chairwoman of health care management and organizational leadership at Quinnipiac University in Hamden, Connecticut.
"If they are young and healthy, they won't jump into the risk pool," Mattie told Best's News Service. Without their participation, "then there is adverse selection since the insurers haven't done underwriting and everyone has guaranteed issue. I have heard it called Obamacare Lite and I have to agree."
Mattie suggested lawmakers slow down.
"It's time to get it right," she said. "Put the politics aside and peel back the layers that make up the complexity of our health care system and the insurance market."
Health and Human Services Secretary Tom Price said the measures will grow the insurance market.
"There's cost that needs to come down, and we believe we're going to be able to do that through this system," Price said on Sunday's "Meet The Press. "There's coverage that's going to go up."
"I firmly believe that nobody will be worse off financially in the process that we're going through," Price said.
They'll have choices that they can select the kind of coverage that they want for themselves and for their family, not the government forces them to buy."