Financial experts predict congressional Republicans’ plan to repeal Obamacare and delay installing a replacement could wreak havoc on insurers.
The American Academy of Actuaries, which represents actuaries nationwide, wrote to House GOP and Democratic leaders Wednesday calling for them to consider the negative consequences of repealing the controversial healthcare law.
The top priority for congressional Republicans is to repeal the law through a budgetary procedure called reconciliation that can bypass a filibuster in the Senate. Then they would take a period of time to transition to a new GOP replacement plan.
But even creating a transition could have negative consequences, the academy said.
“Even if the effective date of a repeal is delayed, the threat of a deterioration of the risk pool could lead additional insurers to reconsider their participation in the individual market,” the academy said. The individual market is for people who don’t receive insurance through their job and comprises a majority of Obamacare’s exchanges.
In addition, if Congress decides to eliminate cost-sharing reduction payments to insurers, that could lead to the companies to bolt the market. The payments are intended for insurers to reduce copays and deductibles for low-income Obamacare customers.
The academy added that the GOP might not be able to keep some of its promises on a replacement plan.
For instance, the GOP wants to keep Obamacare’s requirement that insurers not ban coverage for people with pre-existing conditions such as cancer.
However, offering such protection requires incentives, the academy said.
“To ensure viability when there is a guarantee that consumers with pre-existing conditions can obtain health insurance coverage at standard rates requires mechanisms to spread the cost of that guarantee over a broad population,” the letter said.
Obamacare’s individual mandate, which conservatives despise, encourages even “the young and healthy to obtain coverage.”
It also said the law’s premium subsidies help to provide enrollment incentives.
Eliminating Obamacare provisions that encourage enrollment could threaten sustainability of the individual market as only the sickest people would enroll in the exchanges.
However, Obamacare is already struggling with a sicker-than-expected enrollee population. Major insurers such as Aetna and UnitedHealth pulled out of most of their offerings in states because of hundreds of millions of dollars in losses.
The academy noted that any delay in getting a replacement could cause more disruption to insurers.
“Delaying the effective date of repeal while a replacement is worked out likely won’t be enough to assure the stability and sustainability of the individual market,” it said.
