May 11, 2017

Facts Matter: Who causes the Affordable Care Act troubles

AP file photo

The issue:

President Trump and Republicans are building their case for their health care bill on the claim that the Affordable Care Act is in crisis, with insurers hiking premiums and fleeing the markets.

The facts:
  • The law is facing troubles. Aetna announced yesterday that it's pulling out of Delaware and Nebraska, and has already said it won't sell ACA plans in Virginia. The last major insurer in Iowa has threatened to pull out. And CareFirst Blue Cross Blue Shield asked for a huge rate increase in Maryland.
  • On the other hand, Blue Cross and Blue Shield of Tennessee announced this week that it will sell ACA plans in the eastern part of the state that was in danger of having no insurers.
  • As we've previously noted, two independent analyses concluded the marketplaces aren't imploding — insurers' financial stability improved in 2016 after a rough first two years.
  • Insurers pin some of the blame on the health status of ACA enrollees. Connecticut's insurers cited "greater demand for medical services" when they asked for double-digit rate increases. And CareFirst's CEO told the Washington Post that "the pool of beneficiaries is becoming sicker."
  • But insurers are also citing the lack of guarantees from the Trump administration that it will keep paying them for the law's cost-sharing reduction subsidies, or that it will enforce the individual mandate that's supposed to attract healthy customers. CareFirst said the individual mandate uncertainty played "a significant role" in its rate increase.
  • In its letter to regulators, Blue Cross and Blue Shield of Tennessee said it would charge higher rates because of those uncertainties and would reserve the right not to sell coverage if any post-bid changes "destabilize the market."
Why it matters:

There are some problems because of the design of the law — but when insurers are specifically saying they're raising prices because of the Trump administration's actions, the administration is going to share the blame if there is a meltdown.

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