The Big Danger to the Insurance Market from the Washington's game of 'hot potato' over the replacement of the Affordable Care Act (ACA)

The Big Danger to the Insurance Market from the Washington’s game of ‘hot potato’ over the replacement of the Affordable Care Act (ACA)

Costello: Well, then who’s playing first?
Abbott: Yes.
Costello: I mean the fellow’s name on first base.
Abbott: Who.
Costello: The fellow playin’ first base.
Abbott: Who.
Costello: The guy on first base.
Abbott: Who is on first.
Costello: Well, what are you askin’ me for?
Abbott: I’m not asking you–I’m telling you. Who is on first.
Costello: I’m asking you–who’s on first?

The Abbott & Costello routine sure seems like what’s going on in Washington with the “repeal and replace” efforts in the House and the Senate – except it’s not funny, at all. The uncertainty of the messy legislative process has real effects on insurance markets across the nation and, specifically, across the Commonwealth.

House Republicans first tried in March 2017 to pass a bill during the first 100 days of the Trump Administration, but the bill had to be pulled before a vote because objections from House conservatives and moderates made it clear that the bill did not have sufficient votes to pass. A revised bill passed narrowly (217-213) on May 4, 2017 and only after very significant amendments.

In the Senate, it’s not at all clear what will happen. On Friday, June 2, 2017, Senator Richard Burr (R-NC) said in an interview with local television that the House bill was “dead on arrival,” that it is “not a good plan” and that “I don’t see a comprehensive health care plan this year.” This seemed consistent with press reports that the Senate had assembled a “working group” of thirteen (13) Senators to recraft a bill that could pass the Senate. But, as soon as the Senate appeared to be taking a measured and considered approach, Senate Majority leader Mitch McConnell announced on June 6, 2017 that there may be a vote on the Senate version of the bill before the July 4 holiday.

Without a clear legislative path to repeal, replace, repair or otherwise reshape health care, the insurance markets have reacted strongly. For example, President Trump has repeatedly threatened to eliminate the assistance with out-of-pocket costs (deductibles and coinsurance), called “cost-sharing reductions” (“CSR’s”) that were implemented by the Obama Administration but were funded without congressional approval. But, the assurances have not been forthcoming.

In the face of the uncertainty, for example, Blue Cross Blue Shield of Kansas City announced it would pull out of the Kansas and Missouri marketplaces, leaving almost 25 western Missouri counties without a carrier, or “bare.” Similarly, BCBS NC filed a premium increase fourteen percent (14%) higher than it would have if CSRs were guaranteed for 2018.

Closer to home, the five Pennsylvania health insurers that offer Marketplace policies have filed with the Pennsylvania Insurance Commissioner seeking increases of an average of 8.8% for their Marketplace products for 2018. This rate is significantly lower than the significant 32.5% average increase that the Insurance Commissioner allowed last year in an effort to avoid big financial losses by health plans.

Insurance Commissioner Miller stated that the low rate increase may have to be revisited if any ACA replacement legislation strips out two key provisions:

Benefits to reduce the out-of-pocket costs for lower income purchasers and
The “individual mandate.”

She cautions of the potential for significantly increased cost if these two features are not included in any final legislation: “If both [are eliminated], insurers estimate they would seek an increase of 36.3 percent.”

Unfortunately for all of us, the House and Senate seem more intent on being able to face constituents over the summer recess than in developing a workable legislative solution. We’re left wondering “Who’s on first?”