Senate Republican leaders are playing down concerns that repealing Obamacare without a replacement would destroy the individual insurance market, pointing out that the incoming Trump administration can help.
But there may not be much the administration can do unless Congress bails out insurers, experts say.
Democrats say repealing the law without an immediate replacement would cause havoc in the individual market since insurers would bolt the exchanges and leave millions of customers without insurance. The market is for people who don’t get insurance through work and includes Obamacare’s marketplaces.
Republicans are combating that concern as they move closer to repeal, highlighting action from the administration and pointing out that Obamacare customers make up only 6 percent of the insurance market.
Once Trump’s pick for Health and Human Services secretary, Tom Price, gets confirmed, there are “a lot of things they can do administratively to stabilize the market for that 6 percent,” said Sen. John Cornyn, the second-ranking Republican in the Senate.
But the Obama administration pushed back that the executive branch can’t do much to prevent insurers from bolting the marketplace.
“I think that it is just not realistic to think there is a silver bullet that can solve for that uncertainty and keep it from hurting consumers,” said Aviva Aron-Dine, senior counselor to the HHS secretary, during a press call with reporters on Obamacare’s latest signups.
Another official said the “stakes are too high to move forward on repeal without knowing what comes next,” said Ben Wakana, HHS director of communications.
The Trump transition team did not return a request for comment by press time, but the president-elect has been pushing for an immediate replacement.
One expert doubts HHS could do much to prop up insurance markets for a few years while a replacement is put together. That is, unless Congress is willing to provide more money to help insurers.
“There is not a ton of options,” said Chris Sloan, senior manager at the consulting firm Avalere Health.
Sloan said the administration has several options, including clamping down on special enrollment periods that enable people to buy Obamacare year-round instead of just during the annual open enrollment period.
Another option is to improve the risk adjustment program, which gives extra payments to insurers that take on too many sick patients and forces insurers with too few to pay in to the program.
The idea behind risk adjustment is to help insurers adjust to uncertainty in Obamacare and balance out risk in the marketplaces.
“If you get 3,000 people with cancer, the risk adjustment programs transfers money and compensates for high-cost enrollees,” Sloan said.
However, insurers have been complaining that risk adjustment hasn’t been working as well as intended. Several insurers have sued the administration to get it to readjust the formula.
HHS proposed changes for the 2018 coverage year that would adjust risk adjustment to take into account more issues such as prescription drug costs. It also sought to clamp down on the number of special enrollment periods.
The Trump administration also could give states more flexibility on what plans can offer. Obamacare currently has a list of essential minimum benefits that each plan must offer, with conservatives complaining it restricts choice and unnecessarily drives up costs.
But the question with that option is timing.
“I don’t know if that would happen in time for plans to be able to submit premiums based on this new interpretation for the essential health benefits rule,” said Cynthia Cox, associate director at the nonpartisan Kaiser Family Foundation.
Cox said any changes to regulations would take time as the federal government has to approve new rules.
Cox added that by March, insurers will figure out what their plan offerings will look like. They must submit proposed premium rates this summer and final plans by September.
Another option is available to help insurers, but it wouldn’t come cheap.
One program intended to help prop up insurers under Obamacare was reinsurance, which paid plans that enrolled higher-cost people. All health insurers contributed funds, but the program was temporary and expired last year.
Reinsurance could be brought back, but it would need new funding from Congress, Sloan said.
“If they don’t, then HHS’ options are essentially limited to changing risk adjustments,” he said.
Sloan said it is not clear what repeal and delay would mean for the individual insurance market. Insurers need to start thinking in the spring about whether they will participate in the individual market next year.
He said that the individual market was already on a downward trajectory for 2018, after several major insurers defected this year due to mounting financial losses and several others imposed big increases in premiums.
“I don’t think you just see everyone immediately exit” if repeal and delay happens, Sloan said. “The underlying market factors were already pointing to less participation next year, and this trend just continues.”
