At a high level, the talk centered around three central ideas:
- The consensus seems to be that more power will be given to the states when it comes to plan design and enrollment requirements;
- Carriers need to regain confidence in the market and see a path that will allow them to collect enough in premiums to cover claims, restoring previous losses, making the exchanges profitable for them; and
- The AHCA may have been pulled from the House, but Republicans are still working hard to get a bill in place. We could see this surface as early as May.
What’s happening in the industry at large?
Things are happening. Republicans have a newfound impetus to get something done. There’s an outside chance that there will be a vote on a third version of the bill. The Freedom Caucus has played an important role. They’ve been working to get votes to pass a healthcare bill. This means that healthcare reform is not dead. Sooner or later there will be a bill passed over to the Senate, perhaps sometime in May. As of Tuesday, they were about 10 votes short. There’s also a lot of work going on in the White House.
Carriers should stay in the business and be involved. Things are going to happen and everyone in the market should participate and make their views known.
How should insurance carriers respond to the market uncertainty?
Two core things should be considered:
- Whatever Congress and regulators do with new policy, it must be done in a way that restores industry confidence in this market. Payers are looking for ways to stabilize pricing and market fluctuations that have been occurring since 2014, as well as restore losses.
- Health plans have learned a lot about the market, the types of enrollees and the needs that they have, and the various ways they can manage enrollees and lower the burden of cost. The ongoing application of these lessons and serving these groups is critical. Staying the course in the market can help carriers find the path to stability, though the major onus is on the government.
Do you see the administration and speaker Ryan including some Democrats in the process to get more consensus or do you see this largely being a GOP-driven effort, or is it too early to say?
Right now, it’s probably unlikely there will be any Democrat votes for changing the Affordable Care Act (ACA). Where you’re going to see bipartisanship is when the bill gets to the Senate. You have to look at healthcare as a three-legged stool:
- The first leg is the Republican bill to repeal and replace. This is what’s being played out right now in the House.
- The second leg is the power Tom Price has to change a lot of the Affordable Care Act’s composition and benefits under administrative rules.
- The third leg will be sometime later summer, early fall, when we’ll have to get a bipartisan bill through.
Secretary Tom Price, the Freedom Caucus and Vice President Mike Pence want to give more power back to the states and allow them to have more flexibility. Transferring more power to the states will benefit the carriers and allow them to develop some good insurance policies.
Where could the administration go in terms of achieving results similar to the repeal and replace effort under the regulatory umbrella?
There are three scenarios that could potentially occur:
- Redo of a legislative initiative with bipartisan support. Tom Price would then be faced with implementing the new laws, which would be no small effort.
- Wait it out and try to drive the Democrats to the table. Either Tom Price could facilitate the ACA as it has been thus far and wait for it to “crumble under its own weight”; Not making it stronger, but not subverting the law. Alternatively, the administration could cease payments of cost-sharing reduction subsidies or reinsurance payments which would unravel the market rapidly. If the failure of the ACA will fall upon the Democrats, despite Republican administrative actions, this would drive bipartisan support very quickly.
- Republicans could disrupt the law through four different vehicles: privatization, a series of regulatory changes, a series of legislative sidecars that could garner bipartisan support, and 1332 and 1115 waivers which would drive state-level reforms.
The CBO estimates that the individual markets could stabilize if there is clear direction from the Feds, but we are expecting fewer people in the market. Should insurers forecast lower membership? Should the market become more targeted, but more profitable?
We are a third of the way of what the CBO had forecasted as the market size, so we’re already operating on a skinnier version of what could have been achieved. The question becomes will enrollment fall below or above the current 10-million enrollee baseline? And what is the ultimate goal of policymakers? Many would say it’s less about driving down the insured rate and more about driving access and options and competition. There’s a core philosophy that if access and choice are improved, cost could be driven down and enrollment will go up.
Health plans will start to size plans that fit certain types of buyers, which will create more a variety of plans for people to choose from. But this cannot happen in a vacuum, consumer education needs to continue.
Speaker Paul Ryan’s position (and that of many Republicans) is that he wants everyone to have access to health insurance. They want carriers to come up with as many plans as possible, creating as much choice as possible, without being limited by what the federal government tells the exchanges they can sell or not sell. This could make the market more robust, versus diminishing its size.