Failure Of Republican Health Care Bill ‘Not A Huge Negative’ For Hartford Insurers

March 28--Hartford-area insurers were poised to come out ahead if the Republican plan to repeal and replace the Affordable Care Act passed Congress, but its defeat should not be a major setback, industry experts said Monday.

Cigna Corp. and Aetna Inc. are not major players in health exchanges, so they will be largely unaffected by President Donald Trump's threat that he will let Obamacare "explode," said Spencer Perlman, an analyst with Veda Partners, an investment adviser and health care policy consultant based in Bethesda, Md.

"No insurer wants any part of the insurance market to blow up [but] their exposure is pretty limited because they have chosen not to participate in those exchanges," he said.

Aetna CEO Mark Bertolini made headlines in February when he declared that Obamacare "is in a death spiral." The insurer has not decided if it will quit the ACA entirely, but it has already exited exchanges in hundreds of markets and faces losses climbing to as much as $900 million a year.

Last year, Cigna scrapped a planned expansion of sales on Obamacare exchanges but remained committed to selling plans in seven states this year. The company is taking a "cautious and slow" approach to selling on the exchanges, Cigna CEO David Cordani said during a third quarter earnings call late last year.

Among the biggest winners Friday were hospitals, where officials worried about the millions of Americans who would be left without health insurance if Trump's American Health Care Act passed. The nonpartisan Congressional Budget Office said 14 million fewer people would have insurance in 2018 and that number would grow to 24 million by 2026.

"We had serious concerns that patient care and access would have been compromised under the American Health Care Act as it was written," said Elizabeth Hamilton, a spokeswoman for the Connecticut Hospital Association.

Hamilton said 200,000 people in Connecticut covered by Medicaid expansion risked losing coverage, and a cap on Medicaid funding in the state -- which already has one of the lowest reimbursement rates in the country -- would have led to "unending, chronic Medicaid underfunding, threatening and limiting access for the poorest among us."

Cuts in Medicare payments to hospitals that were used to expand coverage under the Affordable Care Act would have remained in place even while the funding for expanded coverage was cut, Hamilton said.

"This would have damaged the fiscal stability of Connecticut's hospitals and further compromised patient care," she said.

Lt. Gov. Nancy Wyman, chair of the board of Access Health CT, Connecticut's health insurance exchange, celebrated the defeat of "Trumpcare," but also said Obamacare would benefit from improvements. The exchange provides private health insurance options under the Affordable Care Act.

In total, about 300,000 state residents are covered under the law, most through Medicaid.

"From the beginning, Trumpcare was a bad bill," she said in a written statement. "I applaud the millions of Americans who rallied, attended town hall meetings and spoke out against it. We must continue our efforts to make healthcare and health insurance more affordable to everyone -- it's smart policy and it's a moral obligation. This means improving the ACA so healthcare is affordable and within reach for all citizens."

Access Health CT CEO Jim Wadleigh said earlier this year that uncertainty about the future of Obamacare led to fewer people buying plans. Some people believed the Affordable Care Act had already been repealed.

The large health insurers stood to gain from tax cuts under the American Health Care Act. Ana Gupte, an analyst at Leerink Partners, said Congress may still take up that issue.

"It's not a huge negative," she said of the failure of the AHCA. "It certainly was a positive if it had gone through but there are other legislative ways" for insurers to get tax breaks.

"Irreconcilable fractures within the Republican Party ultimately caused the demise of the AHCA, but that does not mean a much more stripped-down version of ACA repeal couldn't move alongside tax reform on a new budget reconciliation measure," Height Securities analysts Andrew Parmentier and Stefanie Miller wrote in a note to investors Monday. "We think this could include repeal of all or some of the ACA's taxes, likely tied into the broader tax reform debate."

Bloomfield-based Cigna saw its stock tumble 2.25 percent on Friday, the company's worst day of the year, after House Speaker Paul Ryan pulled the health care bill. Shares of Hartford-based Aetna were down 0.8 percent.

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