The Affordable Care Act faces two crucial tests this month.
The 2018 sign-up season for health insurance under the Affordable Care Act ends Friday, with experts wondering whether enrollment will fall short of last year’s numbers.
And Congress is hashing out the details of a tax reform bill that would eliminate the penalty for not having health insurance. President Donald Trump has tasked Congress with having a bill ready for his signature by Christmas.
Two health care policy experts gave their views on whether ending the penalty would put the ACA on life support, whether consumers would sign up for coverage and whether health insurers would continue to sell individual policies on the exchanges. They spoke during a conference call sponsored by the Society of American Business Editors and Writers.
No More Penalty?
If Congress repeals the penalty, “nothing will change for the individual market in 2018,” Sara Collins, vice president for health care coverage and access with The Commonwealth Fund, said. But the penalty repeal would take effect for 2019, and that raises a number of questions, she added.
“Insurers already planning for the 2019 open enrollment season,” she said. “The question is will they decide to continue to participate in 2019?”
“From the insurers’ perspective, when you combine the lower enrollment in the states that use the federal exchange, the repeal of the individual mandate penalties and the ongoing reluctance on the part of the administration to encourage people to enroll, 2019 could see even lower enrollment,” Collins said.
As a result, premiums are likely to be higher, she added. The Congressional Budget Office estimated that premiums could increase by 10 percent each year over the next decade if the penalties are eliminated.
“You’ll see fewer insurers likely to participate. The possibility of ‘bare’ counties where no health plans are available on the exchange. Consequently, even lower enrollment and an uptick in the uninsured rate,” she said.
Those who would be affected most from all of this are people earning more than 400 percent of the federal poverty level – or those who earn more than $98,000 annually for a family of four. These are the people who are not eligible for tax credits to cover some of their health insurance costs, and would be responsible for paying the full price of coverage.
“This will really hurt people who are not subsidy eligible,” Kevin Lucia, senior research fellow and project director at the Center on Health Insurance Reforms at Georgetown University's Health Policy Institute, said.
“If you’re healthy and financially stable, you’ll need to make a decision of whether you need health insurance,” he said. “And the downstream effect of that is people who are unhealthy are likely to continue to buy and stay in the risk pool, forcing further escalation of premiums down the road. Overall, it’s problematic.”
“Another question is what will the states do if the penalty is repealed,” Collins said. “They have the legal authority to impose a mandate of their own. Will they make an effort to reach out to insurers? Will they conduct outreach to consumers and let them know that everyone is still required to have insurance even if the penalty goes away? I think it will play out differently across the country.”
What Congress Might Do
Congress “will be under tremendous pressure from constituents” if the penalty is repealed, depending what happens to the marketplaces and if there are bare counties, Collins warned.
Lawmakers may be compelled to enact some short-term fix to stabilize the individual health insurance marketplace, she added. Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., have proposed a measure to fund cost-sharing reduction payments to health insurers and provide states flexibility to skirt some requirements of the health care law.
“But it might take more than that to bring insurers back into the marketplace,” Collins said. “The Alexander-Murray bill addresses the payments for the cost sharing reductions. But it’s also the larger issue of the individual mandate and how significant a problem it will be and what is Congress going to do about it.
Are Association Health Plans The Answer?
On Oct. 12, Trump issued an executive order directing federal agencies to work on new public policies that would extend access to ACA alternatives such as short-term policies, association health plans and health reimbursement accounts.
The order would expand the ability for individuals to get coverage through association health plans. It allows more association groups to meet the status of a large employer group and sell policies to members across the country, Lucia explained.
“The concern is, if more associations can become large employer groups, what effect will that have on the small group and individual market because these plans wouldn’t have to come into compliance with all the consumer protections of the individual and small group market,” Lucia said. “These protections include guaranteed issue, adjusted community rating and essential health benefits.
“The fear is that healthy individuals and small employer groups would gravitate toward the association market, leaving the insured markets with fewer healthy consumers, leading to the marketplaces being less attractive to carriers and translating into higher premiums all around."
Enrollment numbers for 2018 tell conflicting tales, the experts said. Enrollment numbers on the federal health insurance exchanges were up 22 percent over this time last year, with a last-minute surge expected this week. However, there is concern that the overall enrollment numbers may end up being smaller for 2018 than they were for 2017, as well as what that might mean for health insurers’ participation in the ACA exchanges for 2019.
“There’s the theory about why enrollment is running ahead – it’s simply all the media attention on the Trump administration’s actions regarding that marketplaces informed a lot of people they need to get coverage sooner,” Collins said. “We have a shorter enrollment period than previous years. If the enrollment went until end of January, the marketplaces would be on track to enroll as many people as they did last year. But in one week, need to make up a lot of ground.”
But if the 2018 enrollment numbers run short, Collins cautioned, “insurers may be more skittish about participating in the exchanges in 2019.”
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.