Anthem and Blue Crosses
loom large in Obamacare talks
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[February 27, 2017]
By Caroline Humer
YORK (Reuters) - Anthem Inc. and other U.S. health insurers complained
to the White House for more than a year that they were losing money on
people who waited to sign up for Obamacare coverage until they were
They pleaded with the Obama administration to stem their losses by
tightening up on the enrolment rules. When their pleas went unmet,
UnitedHealth Group Inc, Humana Inc, and Aetna Inc pulled out of most of
the government subsidized health insurance market.
But now that the new Trump administration and Republican lawmakers
control the future of healthcare, the industry is getting a new hearing.
And Anthem - the last national insurer playing big in the Obamacare
market - is the loudest industry voice in meetings with policymakers who
all have pledged to overthrow former President Barack Obama’s signature
President Donald Trump, who has said Obamacare coverage is too costly
for customers and taxpayers, is set to meet with insurance industry
Since the election, lobbyists for Anthem and affiliated Blue Cross
insurers have met “24/7’’ with Republicans leading the change effort,
including House Speaker Paul Ryan and Senate Majority Leader Mitch
McConnell, according to one healthcare industry lobbyist.
They are there “every time Senators and staffers are on the Hill,” the
Another industry source who attended some of the meetings said lawmakers
and aides were keen on hearing what the insurers needed to stay in the
That clout may explain Anthem Chief Executive Joseph Swedish's optimism
in comments to investors earlier this month that policymakers would
introduce new enrollment rules limiting when people can opt into
"We do have some positive indicators that stabilization could very
likely occur,” Swedish said. “I am again hopeful that our
recommendations will be looked at very carefully and adopted.”
A day later, the Trump administration took its first concrete stab at
Obama's Affordable Care Act, proposing regulations that would shorten
the enrollment period, establish a new eligibility verification process
and force members to pay delinquent premiums if they want to return to
the same insurer.
The so-called stabilization proposal addressed many of the industry’s
top demands for shoring up the individual market and came after Anthem
said it was considering whether it would remain in 2018.
Anthem is the largest insurer among the Blues, a collection of companies
that share a governing board, a brand and networks. As a group, they
cover the vast majority of people covered by Obamacare.
That means they have the most at stake and a lot of influence in shaping
the future of an insurance market that covers more than 10 million
people, according to people close to the negotiations.
"Blue Cross Blue Shield does have a larger role in discussing changes,"
said an aide to a key Republican Senator.
TRUMP’S 3 ‘R’s: REPEAL, REPLACE, REPAIR
Trump has said he wants to jettison the 2010 law that created Obamacare
and replace it with legislation that would change access to individual
insurance and the Medicaid program for the poor.
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The office building of health insurer Anthem is seen in Los Angeles,
California February 5, 2015. REUTERS/Gus Ruelas
of the administration's Feb. 10 working draft leaked out Friday. But it was not
clear whether there was enough support for all of the measures or how it would
evolve. Any major changes aren’t likely to affect consumers before 2019.
In the meantime, Republican lawmakers are hammering out tweaks to Obamacare they
view necessary to preventing any more insurers from exiting. They are looking at
ways to limit monthly premium increases. For 2017, the average premium went up
25 percent in these Obamacare plans, which incensed many consumers.
and other Blue Cross plans dominated the individual market before Obamacare
coverage took effect in 2014. Obamacare remade that market and sought to
stimulate competition by financing the start up of about two dozen smaller
insurance co-ops. The Obama administration also courted big players, such as
Aetna and UnitedHealth, by forecasting rapid enrolment growth to more than 20
million people, which failed to materialize.
Anthem operates the BCBS license in 14 states and insures more than 800,000
people in the Obamacare exchanges - the single biggest portion. It said it was
making a slight profit on that business. Its rivals exited after losing hundreds
of millions of dollars last year.
Wall Street analysts said Anthem was better at pricing and benefited from a
well-known brand. Its huge pool of members also helps Anthem drive good deals
with doctors and hospitals. Still, Anthem’s business is mostly in the
employer-based market; Obamacare customers comprised only about 4 percent of its
members at the end of 2016.
Ethan Lovell, co-portfolio manager at the Janus Global Life Sciences fund that
owns Anthem shares, said without changes to the exchange rules, the company
would likely have to raise the average premium 20 percent in 2018, as it did for
this year, to keep from losing money.
addition to the enrolment rules, Anthem is seeking changes in the way payments
for the sickest patients are calculated. It also wants an extension to the
planned discontinuation at year’s end of plans that were issued before Obamacare
and that don’t meet the law’s coverage requirements.
Ed Haislmaier, senior health policy research fellow at The Heritage Foundation,
helped draft the proposed stabilization rule Trump announced Feb. 2. He said he
expected the Trump administration to also address Anthem’s older plans.
Swedish also wants the elimination of one of Obamacare’s most controversial
revenue sources - an industry-wide premium tax that insurers say has driven up
premiums in all private U.S. health insurance and that lawmakers agreed last
year to set aside for a year.
On January 4, Representatives Kristi Noem, a Republican from South Dakota, and
Kyrsten Sinema, a Democrat from Arizona, introduced the Jobs and Premium
Protection Act that would repeal the premium tax; it has 145 co-sponsors.
(Reporting by Caroline Humer in New York and Yasmeen Abutaleb and Susan Cornwell
in Washington D.C.; Editing by Michele Gershberg and Lisa Girion)
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