The Next Big ACA Question

Will the individual insurance marketplaces created by the Affordable Care Act live or die in 2018?

The political debate in Washington over the fate of the ACA and a federal lawsuit targeting healthcare subsidies could upend the current system. That has left some insurers with little guidance to plan for the near-term—including whether to even participate in some state and federal exchanges where people buy individual insurance.

That could leave consumers with fewer choices or none at all in some parts of the U.S., especially where competition is already thin and has gotten worse over time.

“Numerous issues currently exist with the marketplace that, unless addressed, put our participation in the marketplace at risk,” says J. Mario Molina, M.D., CEO of Molina Healthcare, which sells insurance on exchanges in nine states, including California, Florida, and Texas.

This is the time of year when insurers set rates and create coverage plans so they can meet a June deadline under the ACA. They need clarity now to properly assess future risk, experts say.

“If insurers don’t know the rules of the game, many will likely throw up their hands and decide not to play,” says Michael Miller, director of strategic policy at Community Catalyst, a nonprofit health advocacy organization.

Currently, one in three counties has just one insurer in the local market, significantly less choice than the one in 14 counted last year, according to the nonpartisan Kaiser Family Foundation. And five states have a single insurer: Alabama, Alaska, Oklahoma, South Carolina, and Wyoming.

Uncertainty has dogged insurers and consumers for months as GOP leaders in Congress tried to pass legislation to repeal and replace the ACA. That effort collapsed a week ago, though some House Republicans say they will revive legislation again.

Congress’s two-week spring recess begins April 10. No date has been set for any new debate.

In addition to watching the legislative debate, insurers are waiting for the outcome of a federal lawsuit that could determine whether Congress funds $9 billion in cost-sharing subsidies that help more than 6 million low-income Americans afford insurance under the current healthcare law.

The Trump administration might decide not to defend the cost-sharing program in court. A ruling against the constitutionality of the subsidy system, which is the backbone of the Affordable Care Act, could do serious damage to former President Barack Obama’s signature healthcare legislation.

“Insurance companies are looking for ways to stay in the market. But those cost-sharing subsidies are critical,” says Kristine Grow, a senior vice president at America’s Health Insurance Plans (AHIP), an insurance-industry group. If the subsidies don’t survive, Grow says some insurers are likely to pull out of the market, or “costs will go up for consumers.”

Uncertainty for Insurers and Consumers

Some consumers are already worried about the potential for fewer choices and rising costs if there are major changes to the ACA or a complete repeal. In a recent nationally representative CR Consumer Voices Survey, 55 percent of the respondents said they weren’t sure they or their loved ones could afford insurance for quality healthcare.

“If the administration aims to destroy the individual market, it is easy to do so,” says Betsy Imholz, special projects director for Consumers Union, the policy arm of Consumer Reports. “Curbing the cost-sharing subsidies would be one severe blow that could cause insurers to withdraw from the market.”

There are plenty of worries for insurers, including regulatory actions that could undermine the ACA and consumer confusion about potential changes that could discourage them from buying insurance on the exchanges.

There’s a great deal at stake for consumers. They could see double-digit increases in premium prices in 2018 on top of steep hikes this year.

If insurers withdraw, rural areas, which already have less competition, will be hit the hardest. People might not be able to get coverage or will turn to non-ACA plans with less comprehensive coverage.

“The Administration needs to take clear steps to protect consumers’ coverage and stabilize the individual market,” Imholz says.

Companies Under Pressure