Apr 7, 2017

Obamacare isn't in a death spiral, but it could be ruined by uncertainty

AP file photo

That's the message of a new analysis by S&P Global, which acknowledges that the Affordable Care Act marketplaces are "fragile" but undercuts the narrative that they're falling apart. The two key sentences:

  • The financial results for Blue Cross Blue Shield plans from 2016, and the enrollment for this year, "show that the ACA individual market is not in a 'death spiral.'"
  • "Every time something new (and potentially disruptive) is thrown into the works, it impedes the individual market's path to stability."

That might be a surprise to everyone who's heard of the double-digit rate hikes for most Obamacare plans last year. But the S&P Global analysts said they've always expected a "five-year path to stability," and that "2016 was year 3." It predicted that there will be more rate hikes for next year, but "at a far lower clip."

Yes, but: That puts them at odds with the Department of Health and Human Services, which circulated statistics earlier Friday showing that premiums and deductibles have been rising since 2014, and insurers have been bailing out.

What insurers will need: Clarity on whether they'll be paid for the Obamacare cost-sharing subsidies, whether the Trump administration will enforce the individual mandate, and whether it will advertise next year's enrollment. "If insurers are uneasy regarding the future of the market, they may have to decide between adding an 'uncertainty buffer' to their pricing or — worst case — exiting the exchanges altogether."

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