By:  Sarah Kliff
Source: Vox

The Trump administration is making Obamacare more expensive

Some health insurance plans selling on the Obamacare marketplaces are planning steep 2018 rate increases, in part to account for the uncertainty over how the Trump administration will administer the law.

The administration has been aggressively ambiguous about key policy issues, like whether it will enforce the health care law’s individual mandate or pay out insurance subsidies aimed at the lowest-income Obamacare enrollees.

In response, insurance executives tell Vox they will charge steeper rates in 2018 in order to avoid losing money. Others are quitting the marketplace altogether, saying the future just looks to uncertain to take a gamble.

“We were hoping for more stability this year,” says Chet Burrell, chief executive of Carefirst, a Blue Cross Blue Shield Plan in the D.C. metro area. “But these factors have lead to instability, and the beginning of a death spiral.”

Obamacare marketplaces were already struggling to attract health insurance plans last year, while President Obama was still in office. Major insurance plans like UnitedHealth and Aetnaquit selling coverage there because the population that signed up was sicker than expected.

“The health plans I work with want to stay in, but the Trump administration is not making that easy,” says insurance industry consultant Robert Laszewski.

Insurers plan to charge higher premiums to account for uncertainty around Trump policy

Multiple health insurance plans have told Vox that their premiums will be higher in 2018 specifically because of Trump administration actions.

This includes CareFirst, a BlueCross BlueShield plan in Maryland, Virginia, and Washington, DC. The insurer submitted its 2018 premiums last week, averaging a 52 percent increase in Maryland and 39 percent in Virginia.

Burrell says that his plans would have had hikes this year anyway, because it has lost money during its three years on the Obamacare marketplaces. But it tacked an extra 15 percent onto its premiums because it does not expect the Trump administration to enforce the individual mandate.

“The current approach at the federal level has been to say they’re not going to enforce it,” he says. “We think the effect of that is to encourage healthy people not to enroll.”

Evergreen Health, a small insurance plan in Maryland, wrote in government rate filings that uncertainty around the individual mandate and other policy issues was the “primary driver” of its requested 27 percent premium increase.

The biggest uncertainty, however, insurers see on the horizon is whether the Trump administration will pay cost sharing reduction subsidies. This is an $8 billion pool of funding to reduce co-pays and deductibles for low-income Obamacare enrollees.

The House filed a lawsuit in 2010 arguing that these subsidies were illegal. The Trump administration has said it will continue making those payments so long as the lawsuit is active. It has not, however, clarified whether it intends to continue defending those subsidies in court — and that is making health insurance plans nervous.

Insurers had hoped that Congress would appropriate funds for this spending in the budget bill it passed last week. The bipartisan bill did not include that money, leaving the health plans in limbo.

“It’s pretty clear we need more certainty to be able to file the rates assuming we get those federal payments,” says Paul Markovich, chief executive of Blue Shield of California. “Short of that, we’d have to assume they’re not being paid.”

Markovich says that his plan is currently preparing different rates to respond to different scenarios that could play out. The hard part will be choosing which one to submit, if the Trump administration does not provide further clarity.

“The most logical thing to do would be to pass an appropriation, especially when this lawsuit is outstanding,” he says. “Saying that we plan to continue the payments when the legality of the payments could be ruled against doesn’t provide certainty.”

New Mexico Health Connections, a non-profit co-op plan, isn’t taking any chances.

Chief executive Martin Hickey says the co-op currently plans to file higher premiums that assume the Trump administration won’t make those subsidy payments.

“Uncertainty breeds higher costs,” he says. “We have to plan for the worst case scenario until it finally gets decided. We have a lot of things to focus on, we’re grinding out hours over rates, and it doesn’t help that people are running around with zombie bills.”

Some insurers are quitting the marketplaces entirely — raising the possibly of “empty” shelf counties

Both Tennessee and Iowa are now at risk of having large areas of the state where no health insurance plans want to sell insurance coverage.

Insurers left these places in part because they had spent years losing money on the Obamacare marketplaces — and in part because there was too much uncertainty under the Trump administration for them to expect the situation to improve.

There are 16 counties in Eastern Tennessee that currently have no health plan signed up to sell Obamacare coverage in 2018. Humana pulled out of that marketplace in early January,

Iowa could be left in a similar situation: 94 of its 99 counties are served by just one health plan, Medica, which is not committed to sticking with the marketplace in 2018.

“Without swift action by the state or Congress to provide stability to Iowa’s individual insurance market, Medica will not be able to serve the citizens of Iowa in the manner and breadth that we do today,” the plan said in a statement to the Des Moines Register.

Two other insurance plans, Wellmark and Aetna, also quit the Iowa marketplace this year citing the law’s uncertain future.

"While there are many potential solutions, the timing and relative impact of those solutions is currently unclear," Wellmark chief executive John Forsyth said in a statement when they quit the Iowa marketplace. "This makes it difficult to establish plans for 2018.”

Aetna said it was quitting "a result of financial risk and an uncertain outlook for the marketplace."

If a marketplace has no Obamacare insurance plans, the enrollees have no where to use their federal tax credits. They may be able to buy an individual policy outside of Healthcare.govbut this would likely be a more expensive plan because it would not have the public subsidy.

In Iowa, for example, the average Obamacare enrollee receives a $307 tax credit to purchase coverage. The state got $156 million last year in total. Iowans would technically be eligible for those subsidies next year, too, but if no insurers sell on the marketplace they’d have no place to spend those credits.

Obama saw these situations as a problem. Republicans see them as an opportunity.

The Obama administration also faced the challenge of “empty shelf” counties, albeit at a smaller level. In 2014, there was an area in Mississippi where no insurers wanted to sell coverage. In 2016, one county in Southern Arizona faced a similar situation.

In both cases, the Obama administration swooped in to negotiate with health plans and convince an insurance plan to sell in the area. The marketplace so far has never had a county go without at least one Obamacare option.

Kevin Counihan, former chief executive of Healthcare.gov, remembers traveling the country last summer to places they felt were at risk of low or no competition.

“We could not administer this law and not have access,” says Counihan. “So a bare county was not acceptable to us.”

Republicans, meanwhile, seem to see these places as a political opportunity. House members repeatedly invoked the situation in Iowa when they made their case for Obamacare repeal last week.

"Just this week, we learned of another state, Iowa, where the last remaining health care plan is pulling out of 94 of their 99 counties, leaving most of their citizens with no plans on the Obamacare market at all,” House Speaker Paul Ryan said.

The Trump administration is unlikely to swoop in and try and convince an insurance plan to come into sell coverage in Tennessee or Iowa. The party’s legislative strategy rests on those places to make the case for repeal.

“Insurers are fleeing the marketplace because Obamacare is fundamentally flawed,” Health and Human Services spokesperson Alleigh Marre recently told Vox in a statement. “As more Americans are presented with higher healthcare costs and fewer options for coverage, repealing and replacing the law remains the best option.”

This political strategy is a risky one. People who live in places without any Obamacare options may blame the health care law, and its faulty drafting. Or, they could point the finger back at Republicans — who control both the White House and Congress, yet haven’t taken steps to fix this problem.