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If Insurance Market Crashes, Can Lawmakers Put The Pieces Back Together?

By Kaiser Health News  
   June 08, 2017

“Is the administration doing what it needs to do to stabilize the market? No, they’re doing the opposite,” said Kevin Counihan, CEO of the insurance exchange program during the Obama administration.

Trump’s biggest weapon, by far, is refusing to reimburse insurance companies for billions of dollars in payments the law requires them to make to help policyholders with incomes up to 250 percent of the federal poverty level (about $30,015 for an individual and $61,500 for a family of four) afford their deductibles and other out-of-pocket payments. These “cost-sharing subsidies” are the subject of an ongoing lawsuit, and Trump can effectively end them at any time by dropping the suit.

Meanwhile, major insurance companies like Aetna and Humana have already announced that they won’t participate in the health exchange market for 2018.

Other plans have said they would like to stay in but only if they are granted huge rate hikes, citing the uncertainty of whether the Trump administration will repay them for the cost-sharing discounts and whether it will enforce the health law’s “individual mandate” that requires most people to have coverage or pay a fine. In Pennsylvania, for example, insurers are seeking premium increases of less than 10 percent for 2018 — but warn that if the mandate to have insurance is not enforced or cost-sharing reductions not paid, those increases could balloon to 36 percent or more.

Those who follow the market closely say the exits and requests for large premium increases are no surprise. “It’s just been one thing after another in this market,” said Kurt Giesa, an actuarial expert at the consulting firm Oliver Wyman. He said if the administration follows through on its threat not to fund the cost-sharing subsidies for the rest of the year, “that could be the straw that breaks the camel’s back.”

Giesa also pointed out that it’s not just insurance companies that would suffer if the individual insurance market is crippled. “That strategy of crashing the market has real human consequences,” he said. “There are 15-million-plus people relying on that.”

Kaiser Health News is a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation.

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