Or you might want to see the Obamacare markets burn to the ground, the better to prove that wholesale change is needed. If you want this outcome, you’ll want to take steps to rattle insurers and destabilize markets.
So far, President Trump, while waiting for your confirmation, has taken pieces from both playbooks. An executive order suggested that you may undermine incentives for healthy people to buy insurance, and your department pulled advertisements encouraging people to sign up. Your department is also apparently taking some steps to shore up the markets: A regulation, currently under review by the Office of Management and Budget, has provisions to try to stabilize markets, according to its title.
The clock is ticking. Insurers must start deciding this spring whether they want to sell Obamacare policies next year and how they should price the plans. That means they are looking for clear signs about the policy environment you will create.
Here are the big choices facing you next as you think about which path to choose:
Should you cut off cost-sharing subsidies?
If you want to break the Obamacare markets, this is your best bet.
The easiest way is to decide to stop providing the money that goes to insurers to help shield low-income customers from large medical bills. The House has sued to stop the administration’s payments on the grounds that they were illegal because they were never appropriated. You can decide to stop defending the administration’s position, effectively cutting off billions of dollars in spending. Insurers have made it clear that they believe they would have little choice but to leave the market. “Much of the marketplace will simply collapse,” said Dr. J. Mario Molina, the chief executive of Molina Healthcare, a California-based insurer. “It will be fast.”
Should you defang the individual mandate?
The health law’s requirement that all Americans obtain health insurance or pay a penalty is very unpopular. But it’s also crucial to an interlocking set of policies devised to keep insurance affordable.
There are various options available if you wish to weaken the mandate. The easiest would be to simply make it easier for people to get exemptions to the policy. You have a lot of discretion to decide whether people’s personal circumstances represent “hardships” that make it difficult for them to buy insurance. If you broaden these categories, and widely advertise these changes, you might cause many more Americans to forgo insurance coverage.
Doing this won’t immediately sting insurers, as removing cost-sharing subsidies would. But it would hurt them in two major ways: It would reduce the number of customers buying their products. And it would make the remaining buyers, on average, sicker and more expensive to cover. Insurers could respond to this change by simply raising their prices, but some will probably respond by exiting the Obamacare markets altogether.
Eventually, if you do not have some effective way of enticing people to sign up for insurance, you will destroy the market, said Karen Ignagni, the chief executive of EmblemHealth, who represented the insurers when the law was first drafted. Whenever a state has forced insurers to cover everyone without having a mandate, “there was a death spiral,” she said, in which the prices got so high no one could afford them and the market collapsed.
Without legislation, your options for replacing the mandate are quite limited.
Will you keep Obamacare websites, outreach and other functions running smoothly?
The Obama administration often looked under budgetary couch cushions to find money to help Obamacare programs thrive. They funded advertising to bring people into the market, made frequent updates to their website to make it easier to use, and provided grants to outside groups that helped people sign up for coverage.
Pulling back on any of these functions could make it harder for eligible people to find out about Obamacare options and harder for them to find the right plan for their needs. That would also tend to suppress signups among healthy people, and increase the cost of insurance coverage.
Will you take actions to reduce ‘gaming’ of the system?
Health insurers have long complained that consumer protections in the Affordable Care Act make it too easy for people to wait until they are sick to sign up and to cancel their plans once they are well again. Your department’s coming regulation seems to be an effort to respond to some of these concerns.
Such actions will probably reassure some nervous insurers by making the market rules more favorable to them. But you may want to avoid making very big changes. There is little time available for carriers to recalculate how they want to price their policies before the filing deadline, and provisions likely to spur court battles may not give them the comfort they are intended to provide.
Time is tight
If you’ve been listening to your boss, President Trump, or your old boss, Paul Ryan, you may be under the impression that Obamacare’s markets are in free fall. But a growing body of evidence suggests they may actually be stabilizing, even in the wake of some really high premium increases in 2017. Matthew Fiedler, the former chief economist for the Council of Economic Advisers, argued in a recent analysis that there is “strong evidence that premium increases did not cause dramatic enrollment declines, much less spark a death spiral.”
And for all their complaining, the insurers seem to be turning a corner. Anthem says it is likely to break even or make money on individual coverage next year, and Centene assured investors that it was “not backing off at all.” Where they head next will be largely determined by your choices.
Reed Abelson and Margot Sanger-Katz
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