Though it seemed like a long shot just a few months ago, it looks as if in a little over two more months, Americans will once again be headed to their laptops and desktop computers to pore through health insurance options via Obamacare's marketplace exchanges.
When Donald Trump was elected president, one of his first proposed tasks was to rid America of the Affordable Care Act (ACA), which is the official name for Obamacare. However, after multiple efforts to do so in the House and Senate, lawmakers have been unable to come to a consensus as to how to repeal and replace the ACA. Despite Trump's best efforts, Obamacare remains the health law of the land, for better or worse.
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Obamacare: Part success, part failure
On one hand, it can be argued that Obamacare hit its primary goal of reducing the uninsured rate. According to data from the Centers for Disease Control and Prevention, it wound up lowering the uninsured rate from 16% before its implementation to about 9% in mid-2016. The ACA's subsidy platform, along with 31 states taking federal funds and expanding their Medicaid programs, allowed millions of folks who previously couldn't afford healthcare access to the system.
On the other hand, Obamacare has failed miserably in its efforts to attract healthier young adults, and, as a result, the exchanges haven't been very business-friendly for insurers. Young adults are a necessary component to the insurers' success, since they don't head to the doctor as often; thus, their premium payments are what insurers use to offset the costs of treating sicker patients. Most of the national insurers have lost significant amounts of money on the ACA exchanges, leading many to jump ship in 2017 and the year to come.
For example, UnitedHealth Group (NYSE: UNH) slashed the number states it's operating in to just three in 2017 from 34 in 2016. Meanwhile, Aetna (NYSE: AET) and Humana (NYSE: HUM), which had their proposed merger shot down by regulators, cut their county-based coverage by nearly 70% and almost 90%, respectively, in 2017, and both plan to exit Obamacare's exchanges completely by 2018. Even Anthem (NYSE: ANTM), which has been a major beneficiary of Medicaid expansion, is exiting a number of markets in the coming year.
The scariest Obamacare figure ever we've seen
As we look toward 2018, one thing is readily apparent when it comes to Obamacare: Premiums will be significantly higher. Insurers in most states are requesting an average of a double-digit percentage increase in premiums. Yet this isn't even the scariest Obamacare statistic (although it's very unpleasant).
The scariest statistic is a result of the exodus mentioned. In the coming year, up to 1,300 counties are expected to have just a single insurer offering plans. Residents in Alaska, Wyoming, Mississippi, Nebraska, Alabama, Iowa, and most of South Carolina, Georgia, North Carolina, Tennessee, and Arizona -- states that cover about 2.4 million ACA enrollees -- could have just one insurer offering plans next year. With 3,007 counties in the U.S. as of 2016, there's the possibility that 43% of all counties will have no choice whatsoever, other than the lone insurer operating in their county. A lack of choices gives insurers incredible pricing power, which could be positive for profits, assuming insurers have lifted premiums enough in 2018, but not for consumers.
President Trump has a solution, and you're probably not going to like it
Donald Trump believes there's a clear problem with ACA prices, and he's often opined that the program will collapse on itself if allowed to continue. However, given the lack of progress in Washington from his own party, Trump has considered "going nuclear" and giving Obamacare a swift kick toward a possible death spiral to elicit progress on the repeal front.
Within the past few weeks, Trump has considered dropping an appeal to a decision District of Columbia Judge Rosemary Collyer made in May 2016. Collyer ruled, based on a lawsuit by the House GOP against former Health and Human Services (HHS) Secretary Sylvia Burwell, that cost-sharing reductions (CSR) -- subsidies that reduce the cost of copays, coinsurance, and deductibles -- were being apportioned without Congress' approval. The Obama administration appealed the decision, and that appeal still stands today, despite new personnel in place. With no majority opposition to keep the appeal in place, Trump and the new Secretary of the HHS, Tom Price, could drop the appeal and allow CSR payments to end.
At the end of the 2017 open enrollment period, some 7.05 million people were receiving CSRs, meaning a majority of these folks would lose their ability to see a doctor should Trump give Obamacare a swift kick off the cliff. While it would likely accomplish his goal of repealing Obamacare, it could hurt both low-income individuals and families, as well as insurers in the process. Anthem has been a big beneficiary of government-sponsored members, so it would probably be the national insurer hurt most by a CSR repeal, should Trump go through with his threat.
We're certainly nearing an inflection point with Obamacare. While it's really anyone's guess what'll happen, the likelihood of further premium increases is growing by the day.
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