Insurers Scramble to Price Health Plans as Policy Seesaws

With deadlines looming to file plans for next year’s Affordable Care Act marketplaces, health insurers are struggling to respond to mixed signals from the Trump administration, delaying key business decisions and scouring Twitter for hints from Washington about the law’s future.

Insurers are set to meet Tuesday with Trump administration officials, and they are hoping for reassurance and greater clarity about the future of the exchanges. Some companies have just weeks, and in a few cases days, to file proposed 2018 rates with state regulators.

If the uncertainty continues, the companies say it will prod them toward more cautious strategies: bigger rate increases, and pullbacks or withdrawals because they can no longer stomach the risk.

At Sanford Health Plan, which offers ACA plans in North and South Dakota, actuaries are using “multiple scenarios” in developing rates, said Kirk Zimmer, executive vice president. “We spend a lot of time looking at media and social media to see if we can glean any useful information,” he said. “It’s a struggle to keep up.”

Minuteman Health, a nonprofit insurer, will have to file proposed rates on its New Hampshire ACA plans by April 24. “It’s a rough draft at best. We’ve told regulators, ‘There’s no way on earth we can price accurately right now,’ ” said Chief Executive Tom Policelli, who added the proposed rates are likely to be “quite high, and we will fine-tune as we go forward.”

Insurers were whipsawed by the Trump administration’s moves last week. President Donald Trump threatened to stop funding the ACA’s cost-sharing reduction subsidies, which help lower-income ACA enrollees with costs such as deductibles, in an effort to prod Democrats to negotiate over a health bill. Insurers are also worried about the future of the ACA’s mandate for people to have insurance, because they fear enforcement could be limited or eliminated.

But the administration also completed a rule designed to address some of insurers’ concerns, saying it aimed to stabilize the marketplaces. Asked about the companies’ uncertainty, a spokeswoman for the Department of Health and Human Services pointed to a statement the department issued last week that said, “The administration is currently deciding its position” on the cost-sharing subsidies. Congressional Democrats are also expected to push for the cost-sharing payments to be included in a spending bill that needs to pass by April 28 to keep the government running.

Health Care Service Corp., one of the biggest ACA-plan issuers, hopes to continue selling the policies in the five states where it is the Blue Cross Blue Shield insurer, which include Texas and Illinois, said Senior Vice President Kurt Kossen, but “we haven’t made any decisions in terms of our participation” for 2018. If the company doesn’t have a clear answer on the mandate and the cost-sharing subsidies, it would have to include those costs in the rate proposals it does submit, he said, and that could raise premiums a “significant amount.”

“When there’s uncertainty, you have to price for the uncertainty,” Mr. Kossen said.

CareSource, a nonprofit that sells ACA plans in Ohio and three other states, wants to be in the exchanges next year, said Jon Allison, executive vice president. But the federal cost-sharing payments represent about 10% of the nonprofit’s revenue for exchange plans, and “how this gets resolved will impact our business decisions on whether we go forward or not in 2018,” he said. “That is an open-ended question for us.”

“You get to the point where you say, if we don’t have the information, we can’t go forward,” said J. Mario Molina, chief executive of Molina Healthcare Inc., which offers ACA plans in nine states.

Insurers in at least two states, Kentucky and Virginia, this week will need to declare whether they expect to offer plans in the individual market next year, though they will have a few more weeks to prepare more-detailed rate filings, which typically run many pages and are based on complex actuarial projections. Other deadlines will roll out in coming weeks, though the federal cutoff, which some states have adopted, has been pushed back to June. Insurers can still change their decisions later than that.

Half of insurers said they couldn’t yet project what rates they would propose for ACA plans, according to a survey from consulting firm Oliver Wyman, a unit of Marsh & McLennan Cos. Of those that did, about one-quarter said they were considering increases of more than 20%, with the largest at 35%, while roughly half were considering hikes of 10%-20% and the rest were below 10%, according to the firm, which got responses from 24 exchange insurers for the poll performed in recent weeks.

Only one insurer said it planned to stop offering exchange plans. Among the companies that currently expect to stick with the business, about 13% said they were likely to reduce their geographic footprints. However, about 13% said they were considering expansion, and the remainder leaned toward keeping their same geographies.

Beth Fritchen, an actuary at Oliver Wyman, said the findings provide a limited snapshot, and developments in Washington could sharply alter insurers’ views. “Anything could change,” she said.

Lobbying groups representing insurers, employers and other health-care industries are prodding Congress and the Trump administration to resolve the cost-sharing issue quickly. Already, Humana Inc. has said it would pull out of the ACA exchanges next year, and two insurers have said they would exit Iowa’s health-law marketplace. Anthem Inc. and Cigna Corp. have said they are considering pulling back.

The Kaiser Family Foundation has estimated that if the cost-sharing funding ends, premiums for the middle-tier “silver” ACA plans could go up about 19% on average, though the impact would vary. The Congressional Budget Office has suggested that ending the enforcement of the coverage mandate though legislation could help push up average premiums for individual plans by 15% to 20%.

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