Obamacare Markets Limping Along Despite Suffering 'Biggest Blow Yet'

Q&A: Former director of Obamacare insurance exchanges says ACA still intact after significant change signed into law.  

Even though President Donald Trump said the tax reform bill “essentially repealed Obamacare,” proponents of the ACA argue that the legislation is still functional.

“I think it’s the biggest blow yet to the success of the marketplaces,” said Joel Ario, who served as Director of the Office of Insurance Exchanges from 2010 to 2011. “It’s been death by a thousand cuts, so there’s been many actions that have hurt these markets, but I think the repeal of the mandate has been the most serious attack yet.”

HealthLeaders Media spoke to Ario for his insights on the landscape of healthcare in the new year.

The following transcript has been lightly edited.

HLM: Do you think it’s accurate for President Trump to say the bill “essentially repealed Obamacare”?

Ario: No, that’s very inaccurate. The essentials of the law are still there, like the guaranteed issue or what’ve we’ve grown to call the “Jimmy Kimmel test.” I think that’s the heart of the ACA, even though the Republicans tried to repeal it several times in 2017. And I think they’ll fail again if they try.

The other main pillar that’s there, the subsidies, will continue to get more expensive. People who are still on subsidies will still be fine; the government will pick up the tab on those rising premiums. Ironically, the Republican action here is going to drive up the cost of the government and hurt mostly the people who don’t get subsidies because they’ll have to bear the brunt of those premium increases.

HLM: What effect will the end of the individual mandate have on the bottom line of health systems in 2018?

Ario: People just above the Medicaid eligibility level, those that are between 138 and 250% of poverty level, are well-subsidized with tax credits and cost-sharing reductions (CSRs) or the alternative of CSRs the states now have. The people above that, the middle-class population that is struggling, will have trouble affording premiums. They might be the kind of people who would be more attracted to these alternative plans that have less coverage, particularly for hospitalization, so this might result in a rise in bad debt.

HLM: What are your thoughts on the public conversation between Sen. Susan Collins with Republican leadership on Capitol Hill about funding CSRs?

Ario: I think the Congress is working itself to the right place on these issues which is that we really don’t need a CSR fix for 2018. To go back and restore the CSR payments for 2018 would further complicate things because it will require states and carriers to undo what they did this fall with regards to the termination.

I think the dialogue between Collins, [Sen. Majority Leader Mitch] McConnell and [House Speaker Paul] Ryan on reinsurance is the more important issue. That will not nearly compensate for the loss of the mandate, but it will be partial compensation for the loss of the mandate. Premiums are going to get more expensive and one way to prevent them from being more expensive is to provide reinsurance into that marketplace. I’m hopeful that is part of the McConnell-Collins dialogue.

HLM: What other things are you keeping an eye on at the start of 2018?

Ario: I think it will be very significant with what the Blue Cross Blue Shield plans are doing. They’re the mainstays in most of these states’ markets. They’ve pulled back in a few places, and where they’ve pulled back it’s been painful for those states. I’d be watching the insurers: The regional community insurers and maybe some of the national insurers will come back at some point, but I wouldn’t expect it in 2019.

The other thing I look at are the states. I thought it was encouraging this fall when the president terminated CSRs. More than 40 states quickly responded with rate review changes that allowed the carriers to be made whole. That’s astonishing. We hadn’t seen 40-plus states, red and blue, act in the same sort of way to make things better for their consumers against a federal assault on the exchanges.