Humana exit highlights uncertainty about ObamaCare replacement plan

Humana’s decision to exit the ObamaCare exchanges at the end of the year could trigger a “domino effect” among insurers, with companies abandoning the marketplace and potentially leaving thousands with diminished or zero coverage options in 2018.

Humana became the first insurance company to pull out of the exchanges for 2018 on Tuesday, amid uncertainty from Congress and the Trump administration about what an ObamaCare replacement will look like and when it might be implemented.

{mosads}“There’s a lot of uncertainty and the threat of repeal and delay is not helping things. It’s causing a lot of uncertainty, and Humana’s exit could be a harbinger of things to come,” said Topher Spiro, a health policy expert at the Center for American Progress.

Insurance companies have warned for months that they would begin dropping out of the marketplace if they didn’t see some signs of stability from Congress.

And history shows that once one insurer drops out of the exchanges, others are likely to follow.

For example, when Aetna announced last year that it would pull out of most of the exchanges, UnitedHealthcare and Humana also scaled back their participation.

“It did start to feel like a domino effect last year, and it could be something similar this year,” said Cynthia Cox, a health policy expert at the Kaiser Family Foundation.

“There’s still a lot we don’t know and a lot of uncertainty in this market, and the Humana exit, in part, reflects that.”

Aetna has not yet said if it will participate in the exchanges in 2018, but at a Wall Street Journal event Wednesday, its CEO echoed Cox’s prediction.

“I think you will see a lot more withdrawals this year,” Mark Bertolini said.

“There isn’t enough money in the ACA as structured, even with the fees and taxes, to support the population that needs to be served.”

“It’s not going to get any better; it’s getting worse,” he added. ObamaCare “is in a death spiral.”

Lawmakers have not yet coalesced around a plan to repeal and replace former President Obama’s signature healthcare law, and insurers are warning they only have about a month before they start crunching numbers and setting premiums for 2018.

But they can’t start doing that until they know if they will continue to receive funding established under ObamaCare and whether the mandate that most Americans purchase health insurance will remain in place.

The Trump administration sent a signal to insurers Wednesday, when it proposed a regulation aimed at “stabilizing” the marketplace that includes several changes insurers have long pushed for, such as shortening the enrollment period for 2018 and requiring proof that people signing up outside of the regular enrollment time qualify.

It could help companies shore up their finances in the ObamaCare market, possibly preventing them from leaving the market or hiking premiums.

But coupled with other moves by the administration — such as weakening the individual mandate and pulling ObamaCare advertisements a week before open enrollment ended — insurers may feel they’re getting mixed messages.

While Trump campaigned on the promise of repealing and replacing ObamaCare, he could be blamed for premium hikes or insurers dropping out of the market while Congress debates replacement plans.

“On the one hand, you have a destabilizing message, and the other a stabilizing message, and it’s not clear what direction they’re heading,” Cox said.

Many insurance companies and trade groups praised Trump’s proposed regulation as a good “first step” toward stabilizing the markets.

“It certainly is a positive development,” said Ceci Connolly, president and CEO of the Alliance of Community Health Plans.

But the administration and Republican leaders have been silent about whether they would continue reinsurance and cost-sharing payments to insurers for taking on low-income enrollees and sicker patients.

Some GOP lawmakers, such as Senate Health Committee  Chairman Lamar Alexander (Tenn.) and Rep. Mark Meadows (N.C.), have leaned in favor of the cost-sharing payments.

Without those continued payments, many companies view the marketplace as a nonstarter.

The proposed regulation is a “good, smart step to improve the stability of the market, but unfortunately, there are enormous questions around financing the individual market,” Connolly said.

“Our plans are going to have to make some very difficult decisions this spring and are looking for better information from policymakers.”

On Tuesday, Aetna and Humana called off a proposed merger that was blocked last month on antitrust grounds. 

Federal Judge John Bates ruled in January that the merger would unacceptably cut down competition in Medicare Advantage and in the ObamaCare marketplaces.