Health care insurers have a new normal: uncertainty


The leaders of New York’s health industry trade groups gathered in Albany March 24 to discuss the impact of the Republican bill to replace the Affordable Care Act. By the time the event ended at noon, House Speaker Paul Ryan was heading to the White House to tell President Donald Trump they should call off the vote amid dissent within 
Republican ranks.

“Everyone expected there was going to be a vote,” said Paul Macielak, president of the New York Health Plan Association. “Two hours later that’s not the reality anymore, and you’re looking at a new set of unknowns.”

Welcome to the new normal. Such uncertainties about federal health care policy bedevil New York’s actuaries and insurance executives, who have to plan for what they can’t possibly predict. And that could impact the prices individuals and small groups pay for insurance. By May 10 health insurers must advise the state Department of Financial Services how much they expect to raise premiums for plans sold to individuals and small groups next year. That leaves little time to sort through the chaos in Washington, D.C., where Republicans are still talking about reviving reform, while Trump has tweeted that Obamacare will “explode.”

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“Pricing is contingent on knowing all relevant factors,” said Karen Ignagni, chief executive of EmblemHealth, which runs HIP and GHI.

Insurers must consider how much costs will rise for medical care and prescription drugs; how government actions may affect consumers shopping for coverage, whether young or old, sick or poor; and what the future of Obamacare-created taxes on premiums will be.

Furthermore, if Obamacare stays in place for now but Trump decides not to enforce its mandate that 
everyone buy coverage or face fines, New York could be right back where it was in 2013.

At that time the state prohibited plans from denying coverage or charging different premiums based on age or health status. Because it didn’t mandate that younger, healthier people buy insurance, premiums became so high that only the sickest customers purchased coverage. “Nobody wants to see history repeat itself,” Ignagni said.

One of the many unknowns troubling Ignagni is a pending federal appeals court case, House v. Price, which could determine the fate of Obamacare’s cost-sharing reductions.

In Trump’s court

Federal payments to insurers are supposed to help them make deductibles and coinsurance more affordable for lower-income consumers. The Obama administration had appealed the original court ruling that the payments were unconstitutional because they weren’t authorized by Congress.

But Trump could simply decide to drop the appeal and strike a fatal blow to the program, which is 
expected to yield U.S. insurers about $7.35 billion this year. An end to the subsidies—with plans still on the hook to lower costs for members—could lead to 
financial losses, according to an analysis by The 
Commonwealth Fund.

“Failure to fund that means people with coverage will have a difficult time affording care,” Ignagni said. “It’s very difficult to provide product pricing without knowing the answer to that question.”

In New York, most of the people who qualify for cost-sharing reductions are enrolled in the state’s 
Essential Plan. That product serves more than 665,000 residents who earn up to 200% of the federal poverty level—$48,600 for a family of four. They pay monthly premiums of $20 or less per person. Elisabeth Benjamin, vice president of health initiatives at the Community Service Society, said that barring Trump’s decision to drop the appeal, she’s optimistic that New York’s 
individual marketplace will remain stable next year.

She said the state has repaired its dysfunctional individual insurance marketplace. As recently as 2013, the individual market had only about 21,000 customers and sky-high premiums, according to the United Hospital Fund.

It now has about 360,000 participants, who purchase coverage through the state’s website or directly from plans. Premium rates for these customers last year were 55% lower than before the establishment of the state marketplace, according to DFS.

“Our insurance market is quite healthy given the uncertainty that exists,” Benjamin said.

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Health care insurers have a new normal: uncertainty

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