Republicans’ effort to repeal the Affordable Care Act but leave it intact for a few years likely would cause some insurers to leave the market or raise premiums, according to a new study.
The study from the center-left think tank Urban Institute interviewed 13 insurers that offer Obamacare plans in 28 states. The study was published Thursday as House and Senate Republican leaders map out a timeline for repealing the law but leaving it in place while an alternative is approved.
The health of the individual market, which includes Obamacare’s exchanges and is used by people who don’t get insurance through their jobs, has been a major point of debate in the battle over the future of the law.
Democrats say that if the GOP repeals the law without an immediate replacement it would cause havoc on the marketplaces, forcing insurers to leave and causing millions to lose insurance. Republicans counter that the individual market is already in turmoil because of Obamacare’s poor policies. They point to big increases in premiums for the 2017 coverage year and major insurers already fleeing the market.
The study found that most insurers weren’t expecting Donald Trump to win the presidency and are still analyzing the potential policy changes to the law.
Insurers said they could manage policy changes as long as the rules are made clear and they are given time to implement them, the study said.
However, insurers are worried about the GOP’s plan to delay repeal of the law for a few years, eliminate cost-sharing subsidies for 2017 or immediately repeal the individual mandate that forces people to have insurance.
The study pointed out that other surveys have found as many as 40 percent of Obamacare customers signed up because of the mandate, which charges $695 per person for not having insurance or 2.5 percent of household income.
While insurers are contractually obligated to offer plans for 2017, that is not the case for 2018. Insurers have to start planning for next year now, as plans and rates are due late summer.
However, repealing the law’s individual mandate or repealing the law without a concrete replacement would cause uncertainty and could result in carriers leaving the marketplaces or raising premiums to compensate, insurers told researchers.
“In the absence of a mandate or an effective replacement policy for 2018 some insurer respondents indicated that insurers would seriously consider a marketplace exit,” the study added, but did not indicate how many would leave.
One insurer said that the company needs to make decisions in the first quarter of 2017.
“Although no consensus emerged from our discussions on exactly how long a transition period ought to be, insurers generally estimated that the task of adapting to a new regulatory framework would require multiple years,” the study said.
Many insurers added that their business decisions would be more likely tied to the rules governing the individual market during any transition period.
One insurer said at least three years were needed for a transition. However, some Republicans have advocated for a two-year transition, and others up to four years.
The insurers were also worried about any interruption to the law’s cost-sharing reduction payments. Insurers pay down the cost of deductibles and copays for certain low-income Obamacare customers, and in turn are reimbursed by the federal government.
However, the study said those payments could cease due to a pending federal lawsuit or administration action taken by President Trump.
If that were to happen, payments could cease in the middle of 2017 or next year.
“The insurers we interviewed indicated almost unanimously that failing to provide [cost-sharing reduction] reimbursement would be financially devastating,” the study said.
It could undermine the stock value of insurers, and multiple insurers added it would mean that they couldn’t financially support plans that offer the reductions, which are required by the law.
The study did not name the 13 insurers nor did it quantify how many could leave the market. The Urban Institute said the insurers interviewed ranged from smaller regional nonprofits to large carriers.
