Obamacare insurers prepare for year 2018
The New York Times | Aug 26, 2017
Obamacare companies must set their final plans and premiums for 2018 by late September, even as the Trump administration continues to threaten to cut off billions of dollars in government subsidies promised by the legislation. Insurers are also awaiting Senate hearings set to start on Sept. 6 for a hint of what steps, if any, lawmakers may take to stabilize the market.
Under the health law, in exchange for the wellspring of new customers, insurers agreed to operate using a fundamentally different business model. As the law required, they offered coverage to everyone, including people with existing medical conditions, and no longer charged people in poor health sharply higher prices.
But the industry’s enthusiasm gave way to misgivings as insurers lost billions of dollars in the law’s first years. Eager to enroll as many people as possible, many companies set prices too low because they had no experience covering these new customers. Some people, especially if they were young and healthy, complained about higher premiums, even though the prices were often below the actual cost of providing medical care. Insurers had a hard time managing people with the biggest medical expenses, and fewer healthier people than expected signed up.
The individual market is estimated to encompass around 20 million people, including those who buy coverage directly from a broker or insurance company and do not qualify for a subsidy. In contrast, about 155 million Americans get coverage through their jobs.
The health law has also provided insurers, including major players, with another opportunity to make money: the expansion of Medicaid, the state-federal government program for low-income people that now covers nearly 75 million people, according to the Kaiser foundation. About 14 million people enrolled in the program in states that accepted federal funding.
Mr. Trump’s threats to stop reimbursing insurers for plans that waive deductibles and co-payments for low-income people are particularly worrisome.
Under the law, insurers must offer these more generous plans, and they priced their policies assuming they would receive about $7 billion from the government this year to cover the costs. The companies are paid monthly, and Congress has not appropriated the money. Mr. Trump could stop the checks.
An analysis by the Congressional Budget Office estimated that premiums for the most popular plans would increase by 20 percent next year if the financing were cut off.