New S&P Report: GOP (in)action might drive up your premiums
Following the Republicans’ crippling failure to repeal the Affordable Care Act, Standard and Poor’s released a report on Friday that made clear, once again, that the ACA is not in a “death spiral,” and that it’s now up to the Republicans whether the law continues to work, or they cause uncertainty that will lead to increased premiums. The GOP’s attempts to discredit the health care system could dismantle the steady progress that has been made.
The Trump administration’s muddled messaging on whether it will pay key Obamacare subsidies threatens to disrupt an individual insurance market showing signs of improvement, according to a new analysis from S&P Global Ratings.
…“Every time something new (and potentially disruptive) is thrown into the works, it impedes the individual market’s path to stability,” S&P analysts wrote.
The chief concern is the continued funding for Obamacare’s cost-sharing subsidies. The Trump administration has not committed to funneling $7 billion to insurers, and cutting off that money could prompt an exodus from the market. In the meantime, the uncertainty could convince insurers to hedge their bets and jack up premiums again.
“Insurers will have to decide very, very soon about pricing for next year,” said S&P Global credit analyst Deep Banerjee, because initial rate submissions for Obamacare plans are due over the next couple of weeks in a handful of states.
“They’re basically forced to make one of two choices: put in a surprise buffer — price higher than they would have for the risk in the market… or be more selective in participating in the counties or the states that they’re in,” Banerjee said.
…If the Republicans choose to cut the CSRs for 2018, insurers would have to raise premiums by nearly 20 percent for next year to compensate for the lost revenue, according to researchers at the Kaiser Family Foundation.
The report adds flatly that: “2016 results and the market enrollment so far in 2017 show that the ACA individual market is not in a ‘death spiral.’”
Still, the report warns that uncertainty due to Republicans’ actions in Washington could throw off this steady improvement in the market.
…Other Trump administration decisions, like whether to loosen up on enforcing the mandate for people to get coverage, will also have an effect, the report said.
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.”