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Health Plan Outlook 'Looks Bad,' Certain Consumers Will Pay the Price

Analysis  |  By Gregory A. Freeman  
   June 21, 2017

The future looks grim for health plans unless substantial changes are made in their favor to the Affordable Care Act, says one healthcare economist. That outcome doesn't look at all certain, though.

Healthcare insurers are fast approaching the late summer deadlines for revealing their cards and telling state regulators what they will charge in the coming year, and indications are that in most cases those numbers are going to be significantly higher than this year.

The insurers' experience with the Affordable Care Act has been a dismal one financially, and unless substantial revisions are made to make it more feasible for them to comply with the law and remain profitable, they will have little choice but to make consumers pay more, says Michael A. Morrisey, PhD.

He is a professor and head of the Department of Health Policy & Management in the School of Public Health at Texas A&M University.

"The near future looks bad for health plans. I think a lot of them are going to raise premiums and I've seen a lot of them planning increases in the range of 20-plus percent," he says.

"And how do you not, when you don't know what's going to happen and you certainly know that the utilization has been high? That high utilization doesn't seem to be a one-time phenomenon; it stays up."

Not all consumers will take the hit, however. Those receiving healthcare coverage subsidized by the government will be insulated, while those buying their coverage on the exchanges without government assistance will have to take up the slack, Morrisey says.

"It's not everyone that gets hurt. If you currently have a subsidized health plan, you're kind of alright. If your income doesn't' change, you will pay the same percentage of your income for coverage that you paid this year, even when premiums go up. The higher cost is picked up by the government and the taxpayers," Morrisey says.

"The people that are potentially hurt a lot are those buying coverage off the exchange with no subsidies. They will have no choice but to pay the higher premiums."

How much premiums increase, and the business outlook for health plans, will depend significantly on what the Congress ultimately does or doesn't do in passing healthcare reform, Morrisey notes.

Meaningful reform could include changes that would shore up the state exchanges and make them more viable for insurers, which are continuing to abandon them state by state, he says.

And the Trump administration may be able to make administrative changes that reassure insurers.

"I don't think we are going to get a bailout from the Congress, so that means it will come down to what the administration will do to keep the exchanges stable. The administration may say they don't want their fingerprints on this and whatever happens they want it tied to the Obama administration, so they do nothing meaningful and just watch the exchanges slide down the hill," Morrisey says.

"That may come down to whether the administration thinks they can do that and not be blamed. I'm not a political scientist, but apparently plenty of my colleagues in that area doubt they can do that."

Gregory A. Freeman is a contributing writer for HealthLeaders.


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