Republican Donald Trump's presidency is primed to upend every corner of the health insurance industry that has spent the past six years acclimating to the rules of the Affordable Care Act.
That shift will spill over to Americans with practically any type of health coverage—Medicare, Medicaid, employer-based or individual—which is creating anxiety for many in the industry and consumers alike. Among the most immediately affected were Medicaid-centric insurers, such as Centene Corp., Molina Healthcare and WellCare Health Plans, which took a beating in the stock markets Wednesday presuming the flood of Medicaid enrollees will come to a screeching halt.
“We weren't expecting this. All the polling seemed to point to (Hillary) Clinton winning,” Molina Healthcare CEO Dr. J. Mario Molina told Modern Healthcare on Wednesday. “I watched the returns last night, and all the political pundits, whether they were Democrats or Republicans, were surprised.”
However, Molina doesn't expect a massive impact in 2017 since Congress won't convene until after the open enrollments for all forms of coverage are closed. “I don't think Republicans want to come in and pull out the rug from a lot of people,” he said. “This was a populist movement.”
Each insurance segment under a Trump administration will face incalculable uncertainty. The new individual insurance marketplaces and Medicaid eligibility expansions created by the ACA will likely be dismantled if Trump and congressional Republicans repeal the law, which has extended coverage to nearly 20 million people.
With Republicans controlling the White House, Congress and a vast majority of statehouses, they're poised to shift Medicaid funding to block grants. Medicare premium support and the push toward more privatized Medicare Advantage plans also will be championed. Employer-based coverage has not oscillated much under the ACA, but even there the terrain will shift with the likely demise of the so-called Cadillac tax and employer mandate.
Republicans are almost certain to eliminate the vital underpinnings of the ACA's coverage provisions: the individual mandate to buy health insurance, the premium and cost-sharing subsidies, and Medicaid expansion funding.
One of the most popular provisions of the ACA is the prohibition against health plans charging more or denying coverage to people who have pre-existing health conditions. This policy is known as guaranteed issue. But the ACA included the individual mandate as a way to get healthier people to buy coverage and offset the higher costs of those sicker people. Removing the mandate but requiring insurers to cover all people isn't feasible from a policy perspective.
“If you take one of those away, this doesn't work,” said Craig Garthwaite, a health economist at Northwestern University. “If you want to get rid of the mandate, you have to go back to underwriting.”
That's why some believe Republicans and a Trump administration will selectively choose parts of the ACA to repeal while keeping others, despite campaign promises to completely "repeal and replace" it. Keeping the mandate will lead to a proliferation of bare-bones plans with even narrower networks of hospitals and doctors—which regulators and consumer advocates have termed as “junk insurance” but free-market advocates have viewed as offering more freedom and choice for consumers.
“I think the individual mandate and guaranteed issue are two sides of the same coin and will not go away,” Molina said. “People in Congress don't really want to get rid of them.”
Karen Ignagni, CEO of New York-based health insurer EmblemHealth and the former head of America's Health Insurance Plans during the ACA's formation, said in an interview Wednesday that President Barack Obama's healthcare law created an expectation to provide some baseline level of healthcare.
“I get letters every day from people who now are able to get coverage; they were not able to get coverage in the past,” Ignagni said. “Both from their standpoint and their families' standpoint, they have peace of mind because they are now able to be in the system and have their healthcare needs taken care of.”
Ignagni did not discuss specific ACA policies or potential Republican alternatives. “I think we'll hear from a number of our members asking questions about what's next, how does that affect them,” she said. “You can't answer those questions until the debate evolves.”
Open enrollment for ACA individual and small-employer plans remains underway and ends in January. If the premium and cost-sharing subsidies are eliminated as expected, coverage likely will be unaffordable for a vast majority of people. Those in the industry expect coverage for 2017 to be honored.
“Republicans don't intend to push anybody off their insurance abruptly,” said Robert Laszewski, a health insurance and policy consultant in Washington. “There will be a transition period.”
Yet there's no indication of how long a Trump administration and Congress will keep ACA plans around. That could persuade many ACA shoppers to avoid the marketplaces knowing their plans will be voided soon, which would make the risk pool worse for insurers staying in for 2017 and lead to higher medical claims. Laszewski says Republicans, “believe it or not,” will have to subsidize health insurance companies throughout the transition to cover the losses.
“If you're an insurance executive, you are extremely worried right now,” Laszewski said. “So many healthy people are not going to buy insurance waiting for the promise of the Republican plan.”
Medicaid faces a similarly precarious position. Garthwaite said Medicaid expansion enrollees who may return to the ranks of the uninsured still will get necessary care at hospitals, but hospitals will bear the cost of that in the form of higher uncompensated care.
Republicans have championed privatizing Medicaid. Congress and Trump will give states more control over how to design Medicaid benefits, but private managed-care companies won't be left out of the equation.
“I think Republicans are going to be very cost-conscious,” Molina said. Noting that Medicaid expansion is actually less expensive than premium subsidies, he ventured, “I think we will see expansion of Medicaid up to 200% of poverty.” The ACA expanded Medicaid eligibility up to 138% of the federal poverty level.
House Speaker Paul Ryan and congressional Republicans could press hard to transform Medicare into a premium-support, or voucher, program. Under that model, Medicare beneficiaries receive a fixed amount of money from the federal government, and they use those payments to get their care from either traditional Medicare or private plans. A move away from defined benefits and toward narrower provider networks would potentially expose seniors to higher out-of-pocket costs.
Many insurers have invested heavily in the private version of Medicare, called Medicare Advantage, and view it as a lucrative business line. Medicare Advantage will be “the solution to entitlement reform around health benefits,” Aetna CEO Mark Bertolini said at an investor conference in March.
But the goals of Medicare vouchers don't line up with why Medicare Advantage has grown so much. Premium support will cap how much the government will pay for coverage and presumably requires beneficiaries to pay more if they want a particular health plan. That would either erode the number of health plan options with $0 premiums, potentially dampening enrollment, or it would force Medicare to pay insurance companies much less, potentially dampening their profits and interest in participating.
Higher enrollment would be good for the plans, said Richard Lieberman, chief data scientist at consulting firm Mile High Healthcare Analytics. But Lieberman also said Republicans would probably cut the Medicare budget along the way.
Ignagni said the fundamental tenets of health insurance—quality, affordability and access—won't change with a new administration. Her company and others will be involved in the next round of reform.
“We do a lot of work with our elected officials, both state as well as federal,” said Ignagni, who led AHIP for more than two decades before she left for EmblemHealth last year. “We will continue to do that, absolutely.”