The incoming Donald Trump administration and Republicans in Congress reportedly are rushing to repeal most of the Affordable Care Act within days of taking office, with a possible delay of a year or two while they craft a replacement package.
They're also discussing quick administrative moves to unravel the ACA, such as terminating payments to insurers that compensate them for reducing cost-sharing requirements for lower-income exchange plan members.
But pro-ACA experts and some insurers warn that repealing the law without passing a replacement, combined with administrative actions undermining the law, could prompt health plans to abandon the individual insurance markets in 2018. That's because insurers have to calculate and submit their 2018 premiums by spring, and that task will be difficult or impossible if they don't know the rules of the new Republican-led system. The turmoil likely would affect both the exchange and off-exchange markets, through which nearly 20 million Americans get coverage, they say.
"I would not be surprised by a stampede to exit the market for fear of uncertainty and the strong potential for adverse selection,” said Mike Kreidler, Washington state's insurance commissioner, at a news conference Wednesday organized by the liberal Center for American Progress. Kreidler said he's already gotten calls from nervous insurance leaders and plans to meet soon with the CEOs of the three major insurers in his state, where half a million people have gotten coverage under the ACA.
Republican lawmakers and the Trump transition team reportedly are discussing the option of abolishing most of the law, including the premium subsidies and individual mandate, soon after Trump is inaugurated on Jan. 20, though they recognize it will take many months to draft an alternative. In addition, the Senate Republican Policy Committee issued a document saying regulatory changes could happen on the first day of Trump's presidency, Politico reported. “A lot of this can be scaled back on Day One,” the document said.
But Dr. Mario Molina, CEO of Molina Healthcare, which operates exchange plans in nine states, said uncertainty about what Republicans will offer as a replacement makes it tough for his company to set rates for 2018. “We need to know the rules so we know how to price products,” he said.
Health system leaders also are worried about the prospect of Republicans wiping out the ACA without at the same time establishing an alternative system that provides at least the same level of insurance coverage, because they fear a big increase in costs for uncompensated care. “You can't just repeal it without having some kind of replacement,” said Barclay Berdan, CEO of Texas Health Resources, a 24-hospital system in the Dallas-Fort Worth area.
Kreidler predicted that if Republicans repeal the ACA without at the same time establishing a new system, the individual insurance market could quickly collapse, which is what happened in his state in the late 1990s. At that time, all insurers withdrew from the individual market due to a state law that required them to accept all applicants without regard to pre-existing medical conditions but did not require everyone to have insurance and did not offer premium subsidies.
The situation could be similar if the ACA's individual mandate and subsidies were abolished while the ban on insurers using pre-existing conditions were preserved. Congressional Republicans likely would not be able to repeal that pre-existing condition provision under the expedited budget reconciliation process they are considering for repealing most of the ACA.
If Republicans scrap most of the law without an immediate replacement, that could set off a dreaded death spiral, according to Kreidler. Insurers would panic because they would fear that the consumers who would stay in the market in 2018 would be sicker people, while healthier people would flee due to higher premiums. “I'm worried about what the insurers might end up doing,” he said. “Nothing mandates that they have to be in the marketplace.”
The rapid administrative moves that Republicans reportedly are considering could do even more immediate damage to the individual market, experts say. For instance, stopping the cost-sharing reduction payments to insurers – which House Republicans are seeking to do in a pending federal lawsuit – would cost insurers hundreds of millions of dollars. “Any action they wind up taking that is deemed risky to the market will certainly cause significant destabilization, causing insurers to withdraw.”
“If that subsidy goes away, it will definitely be a factor in our decision whether to stay in the marketplaces in 2018,” Molina said.
But Joseph Antos, a health policy expert at the conservative-leaning American Enterprise Institute, said GOP discussions of administrative moves to unravel the ACA may be mere bargaining chips to persuade insurers to offer plans under the eventual Republican-crafted reform model. He doubted the Trump administration or congressional leaders would risk any drastic action that would disrupt the individual insurance market before they can implement an alternative system.
“No politician can support a policy that would throw millions of Americans off insurance without recourse,” he said.
One Republican analyst advised GOP leaders to consider extending the ACA's unpopular individual mandate to shore up the insurance market until they are able to implement their replacement plan. Even though it would be a tough political sell to conservatives, insurers probably won't be willing to offer plans in 2018 without the mandate because the customer base would skew sicker, said Chris Condeluci, who worked as Senate Finance Committee Republican staffer during the drafting of the ACA.
“Then the Republicans could keep carriers in the game, and maybe that builds good will they can leverage as they develop a replace proposal, because they'll need carriers to be part of that exercise,” Condeluci said.