Obamacare exploding? Maybe just a slow burn

© Reuters. Activists protest the Republican plan to repeal Obamacare during a rally at Freedom Plaza in Washington

By Caroline Humer and Yasmeen Abutaleb

NEW YORK / WASHINGTON (Reuters) – US President Donald Trump said on Friday that Obamacare was “exploding” after Republican lawmakers shelved legislation that would have dismantled the health care law.

That will not happen this month. Probably not even this year.

The more than 12 million people who purchased 2017 health insurance plans on HealthCare.gov and other websites the law created are in no danger of losing their health care or having their premiums rise right now, experts say.

But 2018 is another story.

Republicans could choose to pass a budget that eliminates Obamacare’s cost-sharing subsidies, which help low-income people cover out-of-pocket and other medical expenses. But that would be highly unpopular with consumers who would likely blame the president and Congress for skyrocketing health care costs, experts said.

“That’s one of the ways he’s available to manipulate the Affordable Care Act,” said Morgan Tilleman, an associate at the law firm Foley & Lardner, which represents insurers.

Obamacare, the signature legislation of former Democratic President Barack Obama created by the Affordable Care Act of 2010, is off to a rocky start. The mix of sick and healthy clients has been worse than expected, with premium rates in the individual insurance market up 25 percent this year.

Other parts of the law, such as the expansion of Medicaid to improve coverage for the poor and changes to allow young people to stay in their parents’ health plans, have been popular. And the bill’s defeat is a victory for the hospitals that have benefited from those increased Medicaid dollars.

But many counties across the country have just one insurer, after Humana Inc (NYSE :), Aetna Inc (NYSE 🙂 and UnitedHealth Group Inc (NYSE 🙂 pulled out after reporting hundreds of millions of dollars in losses.

The remaining insurers, Anthem Inc and other BlueCross BlueShield insurers nationwide, as well as smaller companies like Centene Corp and Molina Healthcare Inc must decide in the coming months where to sell insurance and how much to charge.

And that’s where the market’s slow combustion takes off, when insurers leave and premiums rise.

Jeff Jonas, a Gabelli Funds portfolio manager who focuses on healthcare, said that for consumers, 2018 looks uncertain, with a “death spiral” of dwindling competition and rising premium rates.

LOOKING AT 2018

After the failed Republican effort to pass the bill, insurers are seeking changes to help 2018, said US Health Insurance Plans spokeswoman Kristine Grow.

That includes marketplace cost-sharing subsidies, as well as other government payments for sicker-than-usual customers, and the completion of a rule the Trump administration proposed that addresses problems insurers say drive up costs.

The Trump administration could do some of that on its own if it wanted to, like using its regulatory authority to adjust the formula for how it compensates insurers for the sickest people, said Elizabeth Carpenter of the health and research consultancy Avalere Health. .

But it is unknown whether the administration will attempt to work within the existing framework of the law or take steps to undermine it and blame Democrats for its failure.

“If they don’t act and don’t act in the right way, that will further destabilize the market,” said Dr. Mario Molina, CEO of Molina Healthcare. Molina’s enrollment soared to 1 million enrollees in the exchange this year and the company is weighing whether to present plans for next year.

The administration could also decide not to enforce the individual mandate, which requires everyone to purchase health insurance or pay a fine. It already took steps to erode that provision last month, when it backed off from implementing stricter oversight that was supposed to go into effect for the 2016 taxes.

Experts said the individual mandate still costs less than buying insurance, but as it increases each year, more young, healthy people would have incentives to join the healthcare market, helping to offset the cost of sicker patients. .

The nonpartisan Congressional Budget Office estimated that an additional 14 million people would not be insured under the Republican bill next year, with most of the increase coming from repeal of the sanction associated with the individual mandate.

It is not clear what the Republicans will do. Trump said this bill had been shelved but Republicans would end up with a “big” healthcare bill down the road, but for now they are moving toward tax reform.

Until they do, they will have to work within the Affordable Care Act of 2010. You can also undermine the health care law through regulatory authority in the Department of Health and Human Services.