Uncertainty for state exchange after plan fails

State officials, health insurers and consumer advocates are breathing a tentative, temporary sigh of relief after the GOP campaign to repeal the Affordable Care Act collapsed Tuesday due to lack of Republican support.

Still, many worry that the lingering instability the Trump administration has already injected into the insurance market could continue, making it difficult for insurers and consumers to predict health insurance costs in the near future.

“While it’s good news that ‘repeal and replace’ and ‘repeal and delay’ for the moment have failed, the bad news is that the president and his administration have been hard at work undermining the ACA in the meantime,” said state Insurance Commissioner Dave Jones.

President Trump on Tuesday continued encouraging the failure of the ACA, tweeting, “As

I have always said, let Obamacare fail and then come together and do a great healthcare plan.”

Even before congressional repeal proposals were introduced this spring, the White House had been chipping away at the ACA. It loosened enforcement of the health law’s requirement to buy insurance. That requirement causes health costs to be spread more widely because more people, and healthier people, buy insurance. The administration has also threatened to end a critical stream of federal funding, known as cost-sharing subsidies, that helps insurance companies pay for care for millions of low-income Americans. These provisions continue to face an uncertain future and remain a chief concern among state health officials and insurance companies.

“Those two things are largely outside the control of California regulators, and both of them could cause premiums to increase or insurers to leave the market,” said Cynthia Cox, a health policy researcher at the Kaiser Family Foundation. “The political uncertainty has already done some damage.”

The federal government spends $7 billion a year on the cost-sharing subsidies nationwide, and $750 million of it goes to help about 680,000 lowincome Californians cover copayments and deductibles. A lawsuit challenging the legality of the payments is on hold before a federal appeals court. The outcome is largely in the hands of the Trump administration, which has the power to continue or halt the payments. The administration is continuing the payments month-to-month but has not clarified its long-term plans. That makes it more difficult for insurers to set rates for insurance plans, or to decide whether they want to continue selling on exchanges including Covered California, which were created by the ACA and are heavily used by people relying on cost-sharing subsidies.

“We’re pleased it appears the ACA will continue to be the law of the land, but there remains a lot of uncertainty about what may happen next and whether funding will be there,” said Gary Cohen, vice president of government affairs for Blue Shield of California, the largest health insurer on Covered California. “So this is not a time for cheering or high-fives.”

Even California, which has generally maintained a more stable individual insurance market than other states, may not be immune to the consequences other states are facing, such as insurers withdrawing from the exchange, Jones said. It wouldn’t be the first time, however: UnitedHealthcare withdrew last year from Covered California and a number of other state exchanges, citing high costs.

“We’re going to see significant rate increases in California,” Jones said. “I also think there’s the possibility that health insurers will reduce in part, if not entirely, the counties they’re selling in.”

Jones declined to specify which counties insurers may pull out of. Currently, all California counties have at least two insurers offering plans through Covered California, the state exchange where lowincome residents who receive ACA federal subsidies can buy insurance plans.

Covered California plans to make 2018 rates public on Aug. 1. The agency is, for the first time, negotiating with insurers to establish two sets of rates — one that includes the costsharing subsidies, and one that does not.

“This decision is based on the ongoing federal uncertainty around the repeal and replacement attempts of the Affordable Care Act and the dramatic potential impacts such uncertainty has on the rates and on California consumers,” Covered California said in a statement Tuesday. A spokeswoman declined to comment further.

Tuesday marked the apparent end of the months-long push by congressional Republicans to repeal and replace the Affordable Care Act. The House passed a repeal bill in May, but the Senate failed to garner enough support to bring its version of the legislation to a floor vote. On Tuesday, Senate Majority Leader Mitch McConnell pushed for action on a previous repeal bill the Senate passed in 2015, but fell short of the GOP votes needed to bring that measure to consideration.

Lanhee Chen, a health policy research fellow at the Hoover Institution at Stanford University, said he is disappointed the Senate bill failed because it would have been an improvement over the status quo under the ACA. Rising premiums and limitations on choice around mandated benefits still need to be addressed, he said.

“Whether they do get addressed is an open question now because the repeal effort, in the short run at least, has failed,” Chen said. “I hope those get addressed at some point.”