What happens to US health insurance if the hasty Republican overhaul fails?

Not impressed.
Not impressed.
Image: AP Photo/Brennan Linsley
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It’s no given that the top-secret health care plan being pondered by US Senate Republicans will be enacted, given the ideological divides within the party on basic issues like how much the government should subsidize health care. The bill isn’t popular with the American public and appears likely to substantially worsen coverage and raise prices for many consumers.

So what happens if nothing happens?

The most vulnerable group in the current system are the 12.2 million people on the individual insurance market. (Medicare and Medicaid’s funding challenges are long term, and employer-provided group insurance premiums are increasing at “historically low rates,” though higher deductibles are still leaving some workers holding more risk.)

These are the people insured through the Obamacare markets frequently described as “failing” by president Donald Trump’s team. The better descriptor is “erratic.” That’s because insurers, still adapting to these new markets, have to submit their prices to the market six months in advance, and their efforts to do so in the first four years of their existence have resulted in some jarring premium hikes. Most of those hikes haven’t hit consumers, but instead have been borne by government subsidies.

That process—of insurers figuring out how to price these new markets—has been thrown a jarring new loop by the Republican administration. The Trump administration has gone back and forth about whether to extend those government subsidies, known as cost-sharing reductions or CSRs. And separately, the Republican attempt to overhaul the law had created broader uncertainty, since it’s not clear what the rules of the markets will be, or if people will even be required to get health insurance—a key question for companies that set prices based on who they insure.

That’s set up a dangerous cycle: Insurers are reluctant to embrace these uncertain markets, so some aren’t taking the risk. That is leaving some rural counties in the US with only one individual insurer available—which results in higher prices—or even no provider at all. The consultancy Oliver Wyman says nearly two thirds of this year’s higher prices in these regulated markets are because of this factor, writing that “if an insurer submits a rate increase of 30%, two thirds of that increase will be attributable to the CSR and individual mandate uncertainty.”

This isn’t inevitable. Most forecasters, including the Congressional Budget Office, believe the markets will be largely stable if left untouched. Even now, new partnerships are emerging; for example, the health start-up Oscar is partnering with the Cleveland Clinic to provide exchange plans in a number of under-served Ohio counties. (Oscar’s co-founder, Josh Kushner, is the brother of White House adviser Jared Kushner.) Medica, a small non-profit insurer operating mostly in the midwest, told Vox’s Sarah Kliff it’s bullish on expanding into exchanges abandoned by larger competitors, but only if it has some certainty about what to expect.

Initial submissions for health insurers who wish to participate in the health insurance exchanges next year are due by June 21, according to federal officials who manage the program. But insurers have until mid-August to finalize their proposals, ahead of an open-enrollment period that begins in the fall.

Senate Republicans are expected to bring their bill to a vote ahead of the July 4 holiday recess. A failure to pass the bill—or to vote at all—leaves them with very little time to reassure insurance companies to stay in the markets next year. On the other hand, there’s arguably political benefit for Republicans to let the markets fail, since further consumer pain in the health insurance market could in theory convince the public that change is necessary. But Republicans are likely to own whatever results the US health care system delivers ahead of the 2018 elections.

In the meantime, the Affordable Care Act’s popularity continues to rise. But the troubled health insurance markets are convincing many Democratic politicians that their attempts to find a public-private partnership were misguided, and that a single-payer health care system is the only solution. That may leave Republicans, if they are unable to cut back the benefits of Obamacare’s insurance exchanges, faced with a need to accommodate Obamacare’s market-based health insurance while they still can.