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 Hospitals are on the other side of that coin, concerned that a spike
in the cost of Obamacare premiums next year will cause many people
to simply drop insurance coverage, reducing their revenues in the
near future.
Republicans in the U.S. House of Representatives voted to undo
Obamacare on Thursday, but even if the bill - known as the American
Health Care Act (AHCA) - is passed by the Senate it would not solve
a critical outstanding issue for insurers looking at 2018: Will the
government continue to fund the cost-sharing subsidies that help
individuals pay for care?
Health insurers in the last two weeks have written letters to
Congress, sent out press statements and spoken up on conference
calls, saying they need more certainty about the payments.
Thursday's vote did not change that.
The chief executive of Blue Cross Blue Shield Association, Scott
Serota, on Thursday said that the House vote in itself does not
stabilize the exchange market. "It also is critical to fund
cost-sharing reductions during this time," he said.
Molina Healthcare Inc <MOH.N>, an insurer with over 1 million
exchange members, said, "While the debate on AHCA now moves to the
Senate, Congress and the Administration must ensure that the state
Marketplace exchanges are stabilized through at least 2018,"
including finding subsidies and enforcing the mandate that people
have health insurance.
Cost-sharing subsidy payments from the government are estimated at
$7 billion this year and $10 billion next year. Without them,
insurers say they would need to raise rates at least 20 percent next
year.
On Thursday, Maryland released the proposed premium rates filed by
insurers for the 2018 individual market in the state, which showed
increases ranging from 18 percent to 58 percent.
Double-digit premium increases have raised the notion that
Republicans are working on parallel paths to undo the law, creating
a market where plans are so expensive that they only make economic
sense for patients with very high medical costs.
Republicans say Obamacare has already reached that level, and needs
to be replaced with a system they say will make it possible for the
young and healthy to buy cheaper plans by eliminating required
benefits and allowing insurers to charge older patients - who
typically have more medical problems - much more.
HOSPITALS BRACE FOR COSTS
In states that did not expand Medicaid, a provision of Obamacare
that broadened the eligibility of the federal health insurance
program for the poor but was subject to approval by state
legislatures, hospitals are particularly worried about rising
premium costs.
Hospitals in Southern Republican states that did not expand Medicaid
said they expect the number of patients covered through the
exchanges to drop if prices spike in 2018, increasing bad debt.
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"We estimated about a third people on exchange will drop it," said
Will Ferniany, CEO of the University of Alabama at Birmingham (UAB)
Health System.
John Haupert, chief executive officer of Grady Health System in
Atlanta, Georgia's largest safety-net hospital, also said after the
House vote that he worries that customers who have coverage through
the exchanges will not be able to afford Obamacare plans next year.
The hospitals also have longer-term concerns about changes to
Medicaid funding under the Republican proposal, but those concerns
focus on changes that may or may not take hold in 2019 or 2020.
On Thursday, shares of Tenet Healthcare Corp and HCA Holdings
Inc were higher, which analysts said came as the final version of
the bill included more money that would flow to hospitals.
The vote comes as state regulatory deadlines to submit 2018
insurance plans have already forced some insurers to make decisions.
Aetna Inc <AET.N>, for instance, pulled out of Virginia this week.
"I think the decision-making that we have to make right now has to
be based on the reality as it is today," Aetna's chief financial
officer, Shawn Guertin, said in an interview on Tuesday after
reporting that Aetna would lose $200 million on the business this
year.
The window may be closing on a decision, but Ana Gupte, an analyst
at Leerink, said insurers like Anthem Inc, Centene Corp <CNC.N> and
Molina were more likely to participate in the exchanges because of
the positive vote. It may make it more likely that the government
will in fact fund those cost-sharing subsidies, which have been
caught up in a tussle, she said.
Anthem shares ended down 0.3 percent, Centene fell 0.2 percent, and
Molina was up 1.2 percent.
(Additional reporting by Jilian Mincer and Michael Erman in New York
and Yasmeen Abutaleb in Washington, D.C.; Editing by Nick Zieminski
and Leslie Adler)
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