Congressional Republicans are talking to health insurers about ways to prevent a collapse of the insurance market once they pass an ObamaCare repeal bill.
Republicans are planning to pass repeal legislation as soon as January but plan to delay it from taking effect for a few years to avoid immediate disruption in people’s coverage. The delay would also buy them time to come up with a replacement.
But industry officials and healthcare experts are warning that insurers might bail out of the system altogether once a repeal bill passes, particularly since many of them have been losing millions of dollars on ObamaCare plans.
An exodus of insurers could dramatically limit the coverage options for the roughly 10 million people enrolled in the system, potentially creating a backlash.
Recognizing the problem, Republican congressional staffers are in talks with insurers about policies they could implement to help improve their financial situation in that interim period and prevent a breakdown in the market, according to three Republican lobbyists.
The sources say that the talks are in the early stages and that no specific policies have been decided on.
Any policies favorable to insurers could be politically treacherous for Republicans, given that they have railed for years against ObamaCare “bailouts” of insurance companies. It is also unclear if any policy changes would be enough to convince insurers to stay.
It is also possible that no provisions for insurers will end up being included in the repeal bill, making the political messaging simpler. Republicans could instead look to regulatory changes that the Trump administration could make that are favorable to insurers.
One Republican lobbyist said that in discussions about a plan to repeal the Affordable Care Act without a replacement, insurers are “painting a picture of the market that isn’t very pretty and Republican staffers are getting the picture.”
“They want to pump money back in to the insurers without appearing like they’re giving them a handout or bailing them out,” the lobbyist added.
A second lobbyist said Republican staff is discussing the effects of actually getting into law a repeal bill similar to the one passed last year through the fast-track process known as reconciliation. That measure would have taken out the core of ObamaCare on a two-year delay.
The lobbyist said Republicans are discussing: “What’s the impact on the 2018 plan year for that, and if it’s as bad as some people say, what are our options to mitigate the impact without looking like we’re bailing out the health insurance industry?”
Asked about the talks with insurers, a Republican House Ways and Means Committee aide said: “We’re talking with all stakeholders and discussing the best next steps as we work to reform this broken healthcare system.”
It is unclear what specific policies could end up being enacted. A starting point is programs similar to ObamaCare’s risk adjustment, reinsurance and risk corridors.
Those programs help guard insurers against losses by shifting money from insurers faring better financially to those faring worse.
Republicans, though, long denounced those programs as “bailouts” of insurers.
A more likely option could be to get the incoming Donald Trump administration’s Health and Human Services Department to make regulatory changes favorable to insurers.
One regulatory option would be to change the formula used for calculating payments to insurers under risk adjustment, something that insurers have long been calling for.
While it is unclear where the discussions may lead, the talks are a sign of the difficulty for Republicans in managing a repeal of ObamaCare without an immediate replacement.
Many insurers were already shaky about participating in the ObamaCare marketplaces, given the financial losses they have suffered. Once repeal is passed and insurers know the system is going away at some point, they have less incentive to stick it out in ObamaCare in the interim.
Republicans, though, do not have a detailed consensus replacement ready to pass at the same time as repeal.
Iowa insurance commissioner Nick Gerhart, a Republican, sounded concerns about repealing the law without a replacement earlier this month.
“If the new Congress passes a bill to repeal all of the ACA, I hope that a replacement for the ACA is stapled to that bill,” he wrote. “An immediate repeal would lead to devastating consequences in the disruption of people’s care, and create even more uncertainty for millions of Americans.”