Health

Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Not with a shout, but a thumbs-down: With a dramatic last-minute assist from Senator John McCain, Senators Susan Collins and Lisa Murkowski delivered a likely final blow to the Senate's effort to repeal and replace the Affordable Care Act early Friday morning.

Despite the havoc the Senate bill could have wreaked on insurers, their shares rose only slightly after the bill's failure. That's possibly because President Donald Trump tweeted he would "let Obamacare implode." But this threat is more likely to be bluster than an actual strategy. 

Golf Clap
A potentially damaging repeal effort died early Friday morning -- but insurers are loath to celebrate too much
Source: Bloomberg

While the ACA is struggling in some areas with rising premiums and declining insurer participation, it is not collapsing. My Bloomberg News colleague Hannah Recht keeps an extremely handy tracker of insurers' 2018 Obamacare plans. This shows that, while premiums are up and insurer choice is down in several states, the vast majority of Americans will be able to pick between multiple insurers on the individual market next year.  

That's Not an Implosion
While Obamacare is struggling in some parts of the country, there is no mass implosion or death spiral as President Trump's rhetoric might lead one to believe
Source: Bloomberg https://www.bloomberg.com/graphics/health-insurance-marketplaces-for-2018/

Two of the biggest ACA insurers, WellCare Health Plans Inc. and Molina Healthcare Inc., have yet to report earnings for the latest quarter. But the CEO of another, Centene Corp., on Tuesday gave credit to ACA exchanges for the company's better-than-expected earnings in the second quarter.

Anthem Inc. still expects to record a slight loss in the individual market this year, but its latest quarterly earnings beat expectations, and it raised full-year forecasts. It currently plans to leave ACA exchanges in three states, accounting for about 10 percent of its exchange membership in 2018. But CEO Joe Swedish warned that number could increase if the Trump administration doesn't guarantee it will keep paying cost-sharing subsidies that help low-income Americans afford health care. 

Avoiding "Death"
Despite pronouncements of Obamacare's imminent demise, profits are growing at two of the biggest participants
Source: Bloomberg

In other words, it's all up to the president and HHS Secretary Tom Price in the near term. If they want, they can send insurers scurrying away from the exchanges or force them to jack up rates in a way that will damage enrollment. By not enforcing the ACA's individual mandate, killing cost-sharing subsidies and refusing to encourage new enrollment, the administration can dramatically disrupt the exchanges -- no Congress needed.

But as much as President Trump might enjoy the fantasy in his head -- one in which the ACA rapidly collapses and Democrats come to the negotiating table, begging to pass repeal-and-replace measures they've consistently opposed -- letting the individual market devolve into chaos would be an unprecedented presidential act and a huge political risk. 

Not only would this approach directly harm Americans and a sector that makes up a fifth of the economy, it would more likely enrage Democrats (and provide for potent political advertisements) than bring them to the table. The GOP would conclusively own the market failure heading into 2018's midterm elections.

Price said on Friday that "HHS has taken numerous steps to provide relief to Americans who are reeling from the status quo, and this effort will continue." That doesn't sound like someone actively planning to destabilize the insurance market. The growing chorus of calls for a bipartisan ACA fix may not result in a bill any time soon, but nor does it suggest Congress would take kindly to deliberate sabotage.

The Trump administration quietly passed on the latest opportunity to stop paying cost-sharing subsidies, which would have caused exchanges to truly implode. Despite any threatening tweets that might emanate from the White House in the days ahead, expect the administration to keep avoiding that outcome. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Max Nisen in New York at mnisen@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net