A bipartisan proposal to shore up the Affordable Care Act and guarantee the U.S. government keeps helping insurers cover low-income patients would have been something like a best-case scenario for the companies participating in the market -- if it happened several months ago.
As it stands, the bill, spearheaded by Senators Patty Murray and Lamar Alexander, has only a small chance of passing. And even if it does pass, it is unlikely to entirely mitigate the Trump administration's active sabotage of the ACA.
This bill has the potential to help the individual insurance markets in the long run. It would commit to paying insurers cost-sharing reduction (CSR) subsidies for two years. It would also give states more flexibility to create their own ACA fixes, restore funding for groups that help people sign up for insurance, and extend the availability of less-comprehensive and cheaper "copper" insurance plans through the ACA.
But while the effort seems to be gaining momentum in the Senate, the House and President Donald Trump still loom as potential impediments. The president has sent mixed signals: He seemed to support the effort on Tuesday and has been getting credit from senators for pushing a bipartisan solution. But then he tweeted this on Wednesday morning:
The House may not even take up the the bill, let alone pass it, as conservative factions are already making negative noise. It will take time to surmount these obstacles -- and time is a luxury the individual insurance market doesn't have.
The open enrollment period for the ACA starts at the beginning of November and has been shortened. This bill likely isn't going to get done in time for premiums to come down. The state waivers and cheaper insurance plans envisioned by the bill have little chance of being ready for 2018. And the bill's funding to help people enroll will be too late, as well. Even if this bill is passed at warp speed, enrollment will be suppressed and premiums will be higher in 2018. Continuing CSR subsidies would stem some insurer losses, but the market is still likely to be messy.
The ACA was starting to stabilize before the Trump administration arrived, but a combination of neglect and sabotage is shaking the market. Most insurers had already substantially increased premiums, assuming CSR payments would be stopped. Many of those that didn't are doing so now.
The promise that things might improve in 2019 may not be enough to convince insurers stick around; the out-performance and comparatively hassle-free life of insurers that have largely exited the ACA, such as UnitedHealth Group Inc., will continue to beckon.
ACA insurers would certainly prefer this deal to another effort at repeal and giant Medicaid cuts. But a great deal of damage has already been done.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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