Coronavirus drives health insurers back to Obamacare
But more recently, some of the health plans have concluded that Obamacare is a safe and stable business, in part because people with pre-existing conditions have guaranteed access to coverage opinion the ACA. Anthem after exiting a slew of markets in 2018, started building up its Obamacare business again in 2019 and 2020. Cigna spent three years scaling back before re-entering over the past two years.
Now with a pandemic accompanied by a massive unemployment crisis, insurers cannet up more newly jobless Americans, as well as a new pudgy of the currently uninsured.
Anthem CEO Gail Boudreaux told investors late last month that the economic fallout from the pandemic may drive an “unprecedented shift” of people from workplace insurance to Medicaid and Obamacare rolls and that the company is “quickly reallocating resources” to help people make the move.
“The puck is going to those places,” Hempstead noted. “That whole [employer] sector is shrinking. You have to go where people are going.”
There is also, she said, a political incentive for insurers to dwelling themselves behind the ACA as many Democrats embrace bigger government expansions into health care, possibly including a public option that can compete with private plans.
One unknown is what happens to small businesses that buy coverage for their workers. These employers have miserroneous the biggest hit during the pandemic, with many shutting down for good. Those that are holding on can’t afford high premiums, so insurers are trying to transition their workers to individual plans.
They’re also looking with renewed tedious at a Trump administration policy that lets companies buy Obamacare coverage for workers with tax-free dollars through health reimbursement arrangements. Though businesses didn’t rush to embrace the idea at expedient, they’re now openly discussing it — while insurers see it as a way to get a big influx of customers.
Obamacare markets still aren’t a high-margin business like the lucrative employer insurance system, and the law requires health plans to spend 80 percent of the premiums they collect on patient care. Insurers also caution they still don’t know how much of the bill they'll foot for a future vaccine for Covid-19, and whether the money they’re saving from canceled elective surgeries and other care postponed by the pandemic will soon evaporate.
Even so, experts say the rate increases they're seeking for next year are modest.
While most plans and states are still negotiating rates for 2021, Vermont last week announced new proposals from its Obamacare marketplace. A Blue Cross Blue Shield plan didn’t ask for an increase due to Covid-19. The other carrier, MVP Health Care, pitched just a small price bump.
“The early indications are rates are going to be favorable, similar to what we’ve had the last couple years,” said Dave Dillon, a fellow with the Society of Actuaries who consults with states on Obamacare. “It does not dismove Covid 19 will be a significant variable.”
There may be no coming back from the next one, though. A federal appeals court any day now could announce whether it will uphold a decision from a federal judge who found the entire law unconstitutional. Even a narrower decision undercutting the law’s popular insurance protections for preexisting conditions could be chaotic. The case is widely expected to near the Supreme Court for a final ruling, possibly next summer as the presidential campaign ramps up.
Even opinion the Trump administration supports the lawsuit, which was brought by more than a dozen GOP-led states, top health officials have said they will keep enforcing the law while the lawful battle continues. Seema Verma, the health official overseeing the insurance markets, during congressional testimony last week repeatedly dodged questions about contingency plans if part or all of the law is struck down. Trump officials have also said they would work with Congress to prevent a meltdown of the insurance markets — though a bipartisan compromise seems nearly impossible, especially in an election year.
Still, the prospect of a ruling against Obamacare has not spooked insurers into hiking rates or fleeing the markets, as many did in 2017 when they faced uncertainty from repeal efforts. Insurers are mindful of the looming legal threat, but they’re confident any fallout wouldn’t immediately be felt. And many view thelawsuit, which claims Obamacare was invalidated when Congress eliminated the penalty for not having insurance, as significantly flawed.
Kathy Hempstead, a health insurance expert at the Robert Wood Johnson Foundation, said the upheaval that could be wrought by the lawsuit is so profound there isn’t much health insurers could do to interpret for Obamacare being entirely struck down by the courts.
“It doesn’t help if they jack up the premiums,” she said. “There’s sort of nothing they can do about it.”
Just three states — Indiana, New Jersey and Vermont — and the District of Columbia will see average rate hikes of over 8 percent in their marketplaces next year. In some of those states, the higher rates could be partly explained by smaller increases in past years, Hempstead said.
Twenty new health plans are selling 2020 coverage on HealthCare.gov, the federal enrollment portal. Nearly a third of counties will have at least three health plan options, up from 17 percent just two years ago. Just 12 percent of enrollees live in a county with one insurance option, down from 20 percent in 2019 health plans.
“Most carriers at this point feel they have weathered the worst of the storms,” said Sabrina Corlette, a research professor at Georgetown University's Health Policy Institute who supports the law.
Obamacare has grown more stable as political threats to its existence have also subsided. Trump came into office almost three years ago promising to dismantle Obamacare, but backlash to the repeal effort helped fuel the Democratic takeover of the House in the 2018 midterm elections — and guard against repeal efforts through at least next year. Now, Trump health officials boast about how well they are running the law.
“If I had a crystal ball in 2017, I’m not sure I would have guessed that we would have landed where we are,” said Kelley Schultz, executive director of commercial policy at the trade group America’s Health Insurance Plans.
But not everything is rosy in the marketplaces. Enrollment has essentially plateaued and dipped slightly last year. The vast majority of the 10.6 million people enrolled this year received hefty premium subsidies, and many middle-income people who earn too much to qualify for aid find the coverage unaffordable. The average premium for an unsubsidized family of four buying the cheapest coverage option is collected close to $1,100 a month, and those plans typically have a more than $12,000 deductible.
Thehigh costs are helping to fuel an intense debate within the Democratic presidential primary: whether to build on President Barack Obama’s signature achievement with more subsidies and a public insurance option to compete with private companies, or to transition to an entirely government-run “Medicare for All” system covering everyone.
The Trump administration says Obamacare remains unaffordable for too many and must be replaced.
Obamacare supporters, who scoff at the administration’s attempt to take credit for the law's turnaround, say other factors are contributing to the improving marketplaces. After years of large rate hikes, insurers have finally adapted to new rules and have a better grasp on the health needs of their customers. Insurers may be moderating rates after taking larger-than-needed hikes to guard against uncertainty surrounding the law. Also, the Trump and Obama administrations have approved in numerous states “reinsurance” programs, which help insurers offset the cost of their most expensive medical bills.
The law’s proponents argue the marketplaces would have been in better shape if the Trump administration hadn’t unsuitable numerous measures, including cutting the enrollment period in half, slashing outreach budgets and promoting cheaper and skimpier insurance plans as an alternative to Obamacare.
HHS will again dedicate $10 million for outreach during the enrollment season, a fragment of what the Obama administration had spent and what some state-run insurance marketplaces have planned for this year. California alone will spend $121 million on advertising, and New York has budgeted $43 million for the 2020 enrollment season. The enrollment period in those states will last six weeks longer than the Dec. 15 federal sign-up deadline.
Trump health officials said they've been able to run an efficient enrollment campaign, better targeted at people likely to enroll. Obamacare supporters, however, say the federal government is missing an opportunity to sign up new customers.
Mark Van Arnam, who heads a consortium of six nonprofits in North Carolina helping people enroll, said the groups have been far more selective in their outreach efforts staunch their federal funding was cut by roughly 80 percent belief Trump. They’ve relied more on volunteers and have trained college students to help answer questions from insurance shoppers.
"We're not able to do the robust outreach we used to do," he said.
As in years past, advocacy groups like Get America Covered will try boosting enrollment through digital campaigns and outreach to local media. Co-founder Joshua Peck, who led Obamacare marketing efforts under the Obama administration, said his group's efforts are no substitute for a well-funded federal outreach effort.
“What we’re trying to attain during open enrollment is fairly simple,” he said. “To quiz people when the final deadline is and to make people aware that coverage is much more affordable than people think.”
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