The push to get rid of Obamacare has Minnesota health insurers uncertain about what will come next or how to plan for it.
Congressional Republicans took key first steps last week toward the promised repeal of the federal Affordable Care Act (ACA), with House Speaker Paul Ryan at one point citing premium jumps in Minnesota as an example for why the law must go.
Health insurers agree the ACA has problems, but some worry the market for people who buy health insurance on their own could suffer if repeal isn’t done right. They also wonder what’s in store for expanded coverage in public insurance programs under the health law, which has significantly boosted health plan revenue.
The questions come as insurers start making plans for the health plans they’d like to sell in 2018.
“If there’s anything insurance companies really don’t like, it’s uncertainty,” said Dannette Coleman, a senior vice president with Minnetonka-based Medica.
Republicans in the U.S. Senate last week passed a budget resolution that begins the process of repealing the ACA and gives them a way to strike down parts of the law even though their majority isn’t large enough to end a filibuster by Democrats. The House took action as well.
President-elect Donald Trump told reporters last week that he wants legislation for replacing the law to be adopted without delay following its repeal. Insurers worry that in the rush, lawmakers might topple what they call its “three-legged stool.” The law has three key features: a mandate for individuals to buy coverage, tax credits to help them afford it, and rules that block insurers from denying coverage to people with preexisting conditions.
Republicans can get rid of the mandate and tax credits with the budget resolution, policy experts say, but can’t change the insurance rules. That could create a nightmare scenario for insurers, because it would eliminate incentives for healthy people to get coverage while preserving access for people with expensive medical conditions.
“The individual market, both on and off the exchange, would collapse,” said Roger Feldman, a professor of health policy and management at the University of Minnesota.
The health law expanded coverage to more than 10 million people through Medicaid programs in many states, including Minnesota. States often hire insurers to manage care for enrollees, and the business for health plans has been profitable, Feldman said.
On both points, there’s uncertainty about exactly what Republican plans for replacing the law might do.
The net impact on Medicaid coverage, for example, is unclear since Ryan’s blueprint for replacing the ACA calls for restructuring Medicaid. As for the three-legged stool, “there are policy options that could reset the stool,” Stephen Parente, chairman of health finance at the U’s Carlson School of Management, said in an e-mail. “Again, a lot remains in flux.”
The health law fundamentally changed the individual market, which serves self-employed people and those who don’t get job-based benefits. It’s a narrow, volatile slice of the overall market. Minnesota’s individual market nearly collapsed last year under the threat of insurer pullouts due to mounting losses.
In 2015, the state’s nonprofit health plans collectively posted a loss of $158.4 million on operations, due in large part to losses in the individual market, according to the Minnesota Council of Health Plans, a trade group for insurers. State lawmakers are debating whether to shore up the market through a “reinsurance” program, which would cover some insurer costs should they attract enrollees with unusually large claims.
The health law created state-level health insurance exchanges where people could buy coverage, and several carriers across the country have abandoned exchanges over the past year due to losses. It’s been a different story for Medica, which has used the exchanges to help expand into Iowa, Kansas and Nebraska.
This year, for the first time, Medica will cover more customers in the individual market outside of Minnesota than within its home state. To continue what’s become a six-state business, Medica officials are working now on regulatory filings for 2018 products that are due in the spring — even though there are questions about the rules going forward.
Insurers will “take a wait-and-see approach before we start looking at any further expansion, or anything that’s really different from what we have been doing,” said Coleman, the Medica official.
The flux in Washington could bring needed changes, Coleman added. In particular, lawmakers need to consider some sort of reinstatement of the reinsurance protections that existed in the ACA through 2016.
One of Medica’s competitors in Iowa, she said, has told regulators that it was spending $3 million per month on just one patient.
“When you have a certain individual who can cost a health plan $30 million per year, there needs to be some mechanism,” Coleman said.
Cutting its losses
When Blue Cross and Blue Shield of Minnesota said last summer that it was dropping coverage for about 100,000 people in the individual market for 2017, the insurer estimated about $500 million in individual market losses over a three-year period.
The Eagan-based Blue Cross believes that sign-up rules must be tightened to prevent people from entering the market for only a short time to receive costly care.
As opposed to the ACA’s individual mandate, Republicans could usher in a requirement for people to continuously maintain coverage that might work better in conjunction with other changes, said Scott Keefer, vice president for medical affairs at Blue Cross.
But there’s also a sense of urgency over what repeal might mean for the final year of the ACA’s reinsurance program, where payments aren’t scheduled to be made until summer. Blue Cross is expecting a lot of federal money to cover a portion of its 2016 losses.
“Anything that would stop those payments would be disastrous for us,” Keefer said. “We’re talking into the $100 million-plus range.”
At Minneapolis-based UCare, Senior Vice President Ghita Worcester worries consumers will get overly concerned about the potential for problems. She’s hopeful that doomsday scenarios won’t come to pass.
“The repeal doesn’t need bipartisan support, but the replace does,” Worcester said. “So I’m hopeful that people will talk across the aisle and come up with some plans for all of the programs.”