Insurers are lamenting the wasted investment in complying with the Affordable Care Act, but they might be pleased by where a repeal leads them. Consumers may be less pleased.
Selling healthcare insurance on the free market? What a novel idea for a product that has become so different from the way consumers buy almost everything else.
The incoming Trump administration's promise to repeal and replace the Affordable Care Act may mean the millions insurers spent on complying with Obamacare will just be money down the drain. But it may bring the industry back to operating in the free market, says Cynthia Borelli, a principal in the insurance practice group of the law firm of Bressler, Amery & Ross.
That's not necessarily a good thing for consumers, she says.
Insurers are already fretting about what will happen to their Obamacare investments if the law is significantly changed, she says. One of her clients has already spent $125 million in ACA compliance software alone.
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At a recent National Association of Insurance Commissioners conference, she attended, the consensus was that repealing the law will cost the industry hundreds and hundreds of millions of dollars already spent.
"What a waste of money," she says. "I think the insurance companies are saying even if they didn't like all of it, Obamacare is the devil we know. Now we're going to abandon all that money we spent on it and we don't know what's coming next?"
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Since President-elect Trump is a big believer in competition and the free market, Borelli says, he probably will get rid of most of the subsidies embodied in the ACA. "By doing that, we take the Internal Revenue Service and the Department of Labor out of having jurisdiction over parts of the ACA," she says.
Trump is also likely to support legislation which is dependent upon a private exchange or a series of private exchanges, with free competition setting the price, she says.
The president-elect will probably will get rid of the government-funded marketplace, but he has to leave in some parts of the ACA that are popular with the public: prohibitions on pre-existing conditions, portability, and perhaps employer mandates to continue to promote access to healthcare.
Insurance is a 'Strange Animal'
"He definitely will get rid of the subsidies, and that will free up a lot of money for the insurers, who are responsible for paying for many of them," she says. "The question is how Trump will find a way to get the insurance companies to funnel that money back into the healthcare system."
Borelli says she supports a free market, but that healthcare insurance is a strange animal that doesn't necessarily belong there. Healthcare is deeply intertwined with public policy and concerns, so putting it in a free market may mean that those who need healthcare benefits the most are unable to compete, she says.
"We had a free market before with healthcare and we had high costs that impeded access, so I don't know if that is the answer," she says.
"Insurance companies are wondering if it is going to be a free market to the benefit of the insurers or for the marketplace, which means the public. Or is it going to be for the medical providers? Those are opposing interests and we're waiting to see who comes out on top with what we call a free market."
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Gregory A. Freeman is a contributing writer for HealthLeaders.