The premium-stabilization programs of the Affordable Care Act (ACA) will expire this year, and even insurers like Blue Cross Blue Shield — once considered the companies of last resort — are considering leaving the exchanges.
More high-profile -ObamaCare exits would mean less competition and could lead to significant premium hikes.
Such a development would likely help Republicans at the polls this fall, but even many GOP healthcare reform plans retain some of the ideas in the ACA and incorporate elements that insurers say they need to stay afloat.
While many Blues plans continue to assert their commitment to the ACA market, successive rate hikes and insurer withdrawals from the exchanges temper their assurances.
“These Blue Cross plans will stay longer, but they can’t stay forever,” said Robert -Laszewski, president of Health Policy and Strategy Associates and former insurance executive. Laszewski, a consultant for the plans, added that Blue Cross Blue Shield of Texas lost 40 percent of its reserves in the first two years of ObamaCare. “They can’t continue losing surplus forever.”
Losses complicate commitments.
Blues plans posted $1.9 billion in losses from the exchanges in 2015, and many are still determining where they will participate in 2017. Rising premiums in the individual market complicate matters outside of the exchanges as well, -Laszewski said.
While many members of the exchanges receive subsidies, individuals purchasing plans off the exchanges do not, and those account for roughly half of individual enrollment.
“If Blue Cross is asking for a 60 percent rate increase in Texas, you’re going to have people dis-enroll, with the healthiest people tending to dis-enroll and the sickest people tending to stay in,” Laszewski said. “So this issue of half of these people not getting subsidies is really, really critical.”
Alissa Fox, senior vice president of policy and representation for the Blue Cross Blue Shield Association, said insurers are evaluating the situation independently but remain committed to their communities.
“We’ve been selling coverage in the market in every ZIP code for decades,” Fox said. “So we have strong ties to the local community and want to serve all members in that local community.”
In many exchanges, the Blues are the last insurers present — and, in some cases, are even returning. Pinal County in Arizona, which previously had no participating marketplace plans for 2017, finally convinced Blue Cross Blue Shield of Arizona to return to the region.
“Arizona is now an example of what happens when the market is unstable, leaving residents with little choice,” Blue Cross Blue Shield of Arizona said in a statement. “We are re-evaluating our 2017 plans and where Blue Cross Blue Shield of Arizona makes coverage available.”
To address the problems, analysts offered five changes aimed at securing and improving the system.
1. Bring back reinsurance
Sabrina Corlette, research director of health insurance reform at the Georgetown Center for Health Insurance Reforms, said the Centers for Medicare and Medicaid Services (CMS) has already proposed tweaking risk adjustment by incorporating prescription drug claims and is considering bringing back a reinsurance component, where insurers are shielded from some high-cost claims through a fee imposed on all participating carriers.
“Fundamentally, the marketplaces are structurally sound. Just like before the ACA, there is going to be a lot of variability around the country,” she said.
Corlette said that even in the wake of Aetna pulling out, there are a lot of areas that have healthy competition. However, just like before the ACA, there are a lot of areas that lack competition, and the reinsurance component could help bring more insurers into those areas.
2. Embrace higher premiums, skinnier plans
Mike Adelberg, a consultant with FaegreBD and a former official who led exchange policy at the CMS, said the public needs to get more comfortable with higher rates and less coverage.
“Premiums will need to increase, but in a market where 85 percent of enrollees get financial support, maybe there’s been too much focus on premiums,” he said. “The exchanges will triangulate toward a sustainable midpoint — which will likely include higher premiums, Medicaid-like provider networks and utilization controls, and a federal government willing to disappoint other stakeholders in the interest of improving the risk pool.”
3. Eliminate essential health benefits
The rigid benefit parameters are part of the problem with ObamaCare plans, Laszewski said. Inflexible plan structure drives up costs, which makes plans less attractive to consumers.
“If you’re going to have private insurance plans,” he said, “you have to let them figure out what consumers want.”
Laszewski also recommended repealing the individual mandate, with a caveat: Healthy enrollees who wait to buy coverage until they fall ill should foot their own medical bills for their pre-existing condition for two years, while still having access to the insurer’s discounts.
But many, like Timothy Jost, a Washington and Lee University law professor, say the individual mandate will help stabilize the risk pool as the penalty increases.
“I think it’s unfortunate that the individual mandate penalty didn’t fully phase in until this year, and that the premium stabilization programs are gone by that point,” said Jost, who was a consumer representative to the National Association of Insurance Commissioners when the organization was helping craft the ACA. “They should have phased out the premium stabilization programs more slowly and the individual mandate more quickly.”
4. Bring in the young
The CMS is also proposing to ratchet up marketing to “young invincibles” to lure them into the risk pool, a much-discussed shortcoming that has contributed to sicker-than-expected membership and lower enrollment.
Another barrier has been the transitional plans, which Jost called a “crazy idea,” because it continues to keep healthy people out of the new market. Eliminating loopholes is a prominent factor in broadening the risk pool, he said.
5. Check enrollee information upfront
The lag time between when a person enrolls in a plan and when the Department of Health and Human Services fact-checks the provided information — such as income or an address change — could be tightened, according to Ipsita Smolinski, a 20-year policy analyst and founder of consulting firm Capitol Street.
Another obvious fix would be to reverse the rider that Republicans stuck into the last two spending bills that requires risk corridors to be budget neutral.
“But that’s unlikely in a -divided Congress,” she said.
Adelberg agreed. “Paying out the risk corridors is something that a more supportive Congress could do to help the exchanges without overhauling the ACA,” he said.
“More broadly, Congress and the administration need to remediate the reasons the exchange risk pool is smaller and less healthy than commonly projected a few years ago.”
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