BY JESSIE HELLMANN - 01/09/18
06:00 AM EST 126
The
ObamaCare doomsday scenario that many Republicans and Democrats predicted for
2018 is unlikely to come to pass, with insurers having adapted to the
uncertainty that marked President Trump’s first year in office.
Insurers
who decided to stick with ObamaCare after a tumultuous 2017 are likely to have
a relatively profitable year, analysts and experts predict, for reasons including
higher-than-expected enrollment.
“I
think the fact that enrollment is better than expected is good for insurers
that really concentrate on the subsidized population,” said Katherine
Hempstead, who directs the Robert Wood Johnson Foundation’s work on health
insurance coverage.
“I
would think those insurers are feeling good. … It’s good for all the carriers
that stayed in the market, but especially good for carriers that focus on
subsidized people in the market,” she said.
Democrats
and Republicans had starkly different reasons for predicting an ObamaCare
collapse in 2018.
Trump
canceled key ObamaCare payments to insurers called cost-sharing reduction
subsidies, which reimburse them for giving discounted deductibles and co-pays
to low-income customers.
The
administration also slashed ObamaCare’s marketing budget for open enrollment by
80 percent and cut funding to local and state groups responsible for helping
people sign up for coverage.
Democrats
accused Trump of purposely sabotaging ObamaCare and predicted that enrollment
would drop substantially.
Republicans
also predicted the collapse of ObamaCare, but on the grounds that the
Affordable Care Act (ACA) as a whole is a failure.
So
far, both parties look to be wrong. 8.7 million people signed up for ObamaCare
plans for 2018, half a million fewer than the previous year.
Insurers
adapted to changes, raising premiums to make up for the expected loss of the
payments.
And
because ObamaCare’s subsidies are designed to increase with premiums, the
federal government actually ended up spending more on subsidies for canceling
the payments.
Now,
analysts at Goldman Sachs, S&P Global Ratings and A.M. Best are predicting
a profitable and stable 2018 for insurers.
“We
expect more insurers to see positive margins in 2018,” S&P concluded in a
recent report.
A.M.
Best revised its outlook on the insurance industry to stable from negative,
noting that insurers have adapted to recent challenges and improved earnings.
The
insurers most likely to see gains are Centene, CareSource and Blue Cross Blue
Shield, which stepped in to offer ObamaCare coverage in counties that would
have otherwise been bare of an option.
“The
ones that are in the market after a lot of exits are more comfortable, more
stable and understand, and [they] are not as easily shaken,” Hempstead
said. “You’re getting down to a more experienced, committed group of
insurers. … If there’s an individual market, they’re going to serve it. They’re
going to figure out how to make it work.”
A
profitable and stable 2018 would continue a trend seen since early 2016.
A
Kaiser Family Foundation analysis of recently released third-quarter data found
insurers were regaining profitability and the markets were continuing to
stabilize. While that analysis was conducted before Trump canceled the
subsidies, it’s likely that insurers had, overall, a profitable 2017.
“It’s
likely [canceling subsidies] would diminish their profits, but that insurers
will still end up with a more favorable year in 2017 than they had in any of
the previous years of the ACA marketplaces,” said Cynthia Cox, director for the
Program for the Study of Health Reform and Private Insurance at Kaiser.
“We’re
still expecting 2017 to end up being a profitable year for many insurers in the
individual market despite the loss of cost-sharing payments,” she said.
Insurers
could also stand to benefit from an effort in the Senate to include
cost-sharing reductions in an upcoming spending deal. The effort, led by
Sens. Susan Collins (R-Maine) and Lamar
Alexander (R-Tenn.), would fund ObamaCare’s cost-sharing
reductions for two years and provide billions of dollars to states to help
establish reinsurance programs, which help insurers with the costs of covering
high-risk individuals.
While
analysts predict a positive year for ObamaCare’s insurers, some warn of the
potentially negative effects recent and future action could have on the
markets.
The
tax law Trump signed at the end of last year eliminated ObamaCare’s mandate for
everyone to have insurance, which could cause problems in the
marketplaces.
Insurers
could decide they don’t want to participate in ObamaCare’s exchanges in 2019
without the mandate, which was intended to lower costs and prevent people from
waiting until they are sick to buy coverage.
Still,
some experts doubt the repeal of the mandate will have much impact on the
marketplaces or the number of people who enroll.
Two
administrative rules are also expected this year that some argue would draw
healthy people from the markets, potentially resulting in higher premiums and
insurer exits.
“I
don’t think [2018] will be as chaotic as last year, with the constant
repeal-and-replace legislation and major policy changes, like the elimination
of the individual mandate and end of cost-sharing reductions,” said Chris
Sloan, a senior manager at Avalere, a health-care consulting firm in D.C.
“But
continued reductions in the market and substantial premium increases year after
year is not sustainable. The market has weathered it, but given the trajectory
that we’re on, it’s not a healthy trajectory for the exchange,” Sloan said.
http://thehill.com/regulation/healthcare/368019-profit-outlook-brightens-for-obamacare-insurers
