Obamacare was devised as a market system rather than a government program like Medicare. Private insurers compete to offer health plans to customers who don’t get insurance from their jobs or the government. It sets up rules and establishes federal subsidies to help encourage people to buy insurance. But it relies on the voluntary participation of insurance companies to function.
There’s nothing in the health law that forces insurance companies to sell insurance if they don’t want to — as we learned this year, when several major carriers exited the market. And there’s good reason to think that, with the death of Obamacare looming, many more companies would rethink their decision to sell Obamacare policies in the zombie interval.
“Why go through the hassle for something that’s going away anyway?” said Jon Kingsdale, who teaches at Boston University and is a director at the actuarial firm Wakely Consulting Group. Mr. Kingsdale, a former insurance executive, said that insurance companies had tended to weigh the short-term pain of remaining in the Obamacare markets against their long-term hope that markets would stabilize, grow and prove profitable. That calculus would change in an instant if the law were repealed, he said. “This is the perfect excuse to get out,” he said.
In an interview with The Milwaukee Journal Sentinel this week, Speaker Paul Ryan promised that the transition would ensure that “no one is worse off.” That promise could be as hard to keep as President Obama’s statement that, under Obamacare, “if you like your health plan, you can keep it.”
One important part of Obamacare would hold steady during the zombie period, however: The Medicaid expansion, now underway in a majority of states, does not rely on a private market for insurance companies. States would be able to continue offering coverage to poor Americans through Medicaid, even if Obamacare’s end were inevitable. Medicaid expansion is responsible for about half of the health law’s recent reductions in the uninsured.
The Obamacare markets are a different beast. They were never as troubled as their most vociferous critics argued. Mr. Trump was fond of saying that prices were rising by 100 percent or more. That was true in 10 counties, but the typical increase was around 22 percent — high, but not stratospheric. Competition among insurance companies had diminished as many carriers had either failed or exited markets where they had lost money. But every place in the country had at least one insurer offering coverage. Enrollment in the markets was lower than forecast, but was growing slowly.
But even the law’s defenders acknowledged that the markets were rickety and vulnerable. President Obama, in an article published in The Journal of the American Medical Association this summer, suggested major policy changes to backstop the markets. Hillary Clinton’s campaign included a laundry list of new programs meant to address Obamacare’s recent troubles.
Those changes, which would have involved extensive new spending on the existing system and the entrance of a government-run backup insurer, sometimes called the public option, are now off the table.
More modest fixes might have a better chance of passing. As The Hill reported last week, some Republicans in Congress are discussing a package of smaller short-term changes that would make the Obamacare markets more appealing to insurance companies during the zombie period.
Christopher Condeluci, who was a G.O.P. finance committee council when Obamacare passed and now runs a policy consulting business, said he had spoken with current staffers considering such options. Over the last few years, Republicans have resisted changes that would make Obamacare work better, but Mr. Condeluci said that the election had shifted the outlook.
“If there’s disruption, even in a wait for repeal and replace, Republicans are going to look terrible,” he said. “And the Democrats are going to rightly blame them.”
The package of sweeteners might include rules that make it harder for sick people to buy insurance in the middle of the year, and changes that would raise prices for older customers while lowering them for younger ones. Democrats in Congress might even vote for such a package in order to help the Obamacare markets survive.
But those fixes, long requested by insurance companies expecting an enduring Obamacare market, may not be enough once a repeal deadline looms. A “repeal and delay” approach means that even a propped-up market would exist for only a few more years.
For insurers that are losing money now as the market finds its legs and that are well-established in other lines of business, there is less incentive to stick around. The motivation for health plans, particularly large, national for-profit companies, had always been that Obamacare was a long-term growth opportunity, worth some headaches and losses early on. With the program’s end in sight, that hope would be gone, and insurers might balk at the effort required to change products and comply with new, more generous rules.
Marilyn Tavenner, the president of America’s Health Insurance Plans, a large insurer trade group, told my colleague Reed Abelson this week that the current law “needed to be improved.” Her group has not come out against a repeal and delay plan, but it has not guaranteed that insurers would stay put if one passed.
Things will probably stay stable through the end of next year. Insurance companies have signed contracts to offer health plans, and people have already signed up for them.
After that, the future may be less certain than the G.O.P. plan’s nickname suggests. Exits might not happen everywhere, but just as the Obama administration has struggled to keep reluctant insurers in the market, there would be little the Trump administration could do to prevent further insurer flight.
The result could be bare patches around the country — places where no company is selling insurance, and where no one can get access to tax credits to buy it. That might look a lot more like a quick repeal plan than a carefully planned “delay.”