By Erin Mershon, CQ Roll Call
November 15, 2016 -- Republicans eager to repeal President Barack Obama's health overhaul are promising a "smooth transition" for its current enrollees.
However, that could task the Trump administration with completing the ongoing open enrollment period and running the next one—potentially opening it to the same criticisms of increasing premiums and diminishing competition that Republicans have historically lobbed against Democrats.
Even as repeal looms, people are signing up for new or renewed coverage under the health law. New enrollment figures will be released soon. It is the Trump administration that will have to oversee the final days of the 2017 open enrollment period, which ends Jan. 31.
Insurance companies, at least for now, are set to provide coverage under the law through the end of 2017 under contracts with the administration. And the planning process for 2018—in which insurance companies propose rates for review by state and federal officials and commit to participating in the marketplaces—is already underway, said industry spokeswoman Kristine Grow of America's Health Insurance Plans.
In some ways, it's business as usual so far. President-elect Donald Trump said this weekend he does not want disruption in the system as the law is repealed. Republicans' most recent effort to repeal the health law, using the so-called reconciliation process, gave the party two years to come up with a replacement plan before the health law would disappear. Most lawmakers, including House Majority Leader Kevin McCarthy, R-Calif., have similarly said they want to keep the chaos to a minimum.
Though the details are entirely up in the air, a "smooth" transition means there could be some sort of enrollment period for 2018 next fall. According to the latest regulatory schedule, that would mean insurers would have to submit their premiums for 2018 before May 3. That deadline is likely to come before Congress has time to flesh out a replacement, even if it does not build in a two-year transition.
Companies are already planning business strategies, product designs and their premium costs for 2018—and reading the tea leaves as closely as possible, said Ceci Connolly, president of the Alliance of Community Health Plans, which represents smaller nonprofit plans.
"You're hoping that by May, there have at least been some pretty thoughtful, substantive conversations that have taken place to inform that process," she said. "We often find in these situations, when you can't get policymakers to agree on something, they pass a step kind of like a continuing resolution. Sometimes the default is the status quo until the change gets resolved."
But the uncertainty in the market could drive up premiums from insurers concerned about how many people will still sign up for coverage and how sick those people will be. It could also make participating in the marketplaces a riskier business prospect for insurers—which would likely induce more of them to drop out.
This year, Republicans blasted Democrats for months for premium spikes that averaged 25 percent for benchmark silver plans across the country. The GOP spotlighted the massive market withdrawals by companies like UnitedHealth Group Inc. and Aetna Inc., who left, citing millions in financial losses.
Next fall, it will be Republicans overseeing the exchanges--potentially putting them on the receiving end of those headlines and criticisms, if premiums continue to go up or more companies decide to drop out.
"If there's no replacement in effect by the end of 2017, a Trump administration could find themselves operating an open enrollment period with lots of insurers dropping out. And any insurer that stuck around would raise their premiums significantly," said Larry Levitt, senior vice president for special initiatives at the nonpartisan Kaiser Family Foundation. "It's kind of like musical chairs; no one wants to be the one left insuring the sickest people."
"For some period of time, the Trump administration could blame the Obama administration, but at some point they assume the blame themselves," he added.
Calculating the Risks
Annual premium increases are based on several factors, like the expected makeup of the pool of enrollees and the expected annual increase in the cost of care. Insurers also build in a cushion known as the "risk charge," a calculated part of the premium designed to take into account further unknowns.
That part of the charge could fluctuate given the current political situation and the uncertainty of the marketplace's future, according to Cori Uccello, a senior health fellow at the American Academy of Actuaries.
"Actuaries by nature are cautious and conservative about numbers," Connolly agreed. "They're thinking about how they keep their companies afloat."
But insurance companies have had to assess the risk of major threats to the health law in the past—including the 2012 Supreme Court case on the constitutionality of the law's individual mandate, and the 2015 case on the law's central tax credits, both of which would have upended much of the health law had they been decided the other way.
"There were a lot of things over the past few years that [created] uncertainty—did we see premiums go up? No. If the subsidies were taken away, the difference in the risk charge was not going to be enough to compensate for the tremendous upward pressure that would have resulted from the deterioration in the risk pool," Uccello said. "There are potential changes that would dwarf what you would be compensated for in a risk charge."
Insurance companies could also create contingency plans. They could prepare one set of rates if the law's requirements for insurance, such as a ban on lifetime caps or denials based on pre-existing conditions, stay in place during a temporary transition and another ready in case they realize the climate will be more risky for them.
Possibility of Faster Action
It's possible Trump will repeal some of the law immediately—which experts warn could send the markets spiraling. Already some in the conservative House Freedom Caucus and at the right-leaning group Heritage Action are demanding swift action.
Even a relatively simple step, like ceasing to fund the law's cost-sharing reductions for insurance companies, which could be quickly done through administrative action, could upend the market, experts said. It would drain a major source of funding that insurers counted on when they set their rates, dramatically changing their business prospects for the coming year. Some might drop out of the market, kicking their customers off their plans.
And repealing the law's unpopular—but central—individual mandate would be even more devastating, experts said. The individual mandate was the key reason insurance companies agreed to cover people with pre-existing conditions, which they often did not do before the health law passed. The ban on exclusions for pre-existing conditions is among the most popular parts of the law. Even Trump has expressed support.
"If they did that, it would be catastrophic," Uccello said. "If the mandate goes away for 2017, not only are you having the problem of people dropping coverage, but with that, the risk profile is going to deteriorate and now premiums that already have been finalized are too low compared to what insurers need. You're going to have insurer insolvency problems as well as more people being uninsured....That it would be problematic would be an understatement."
The incoming administration is still weighing the options and has not yet even announced who will lead the efforts. Former presidential contender Ben Carson will not oversee the Department of Health and Human Services, a spokesman told news outlets Tuesday. Other names under consideration are former Louisiana GOP Gov. Bobby Jindal and Rep. Tom Price, R-Ga.
