Early ACA Repeal Could Trigger Market Collapse For 2018

By Susan Rupe InsuranceNewsNet

Repeal of the Affordable Care Act is foremost on the Senate agenda this year, as Senators passed a measure early Thursday morning to take the first step forward on dismantling the health care law.

However, one expert on the ACA warned that an early repeal of the law without a replacement could trigger a collapse of the individual market for 2018.

Joel Ario, managing director of Manatt Health, made that prediction during a webinar Thursday on what the Trump administration would mean for health care. Ario previously served as director of the Office of Health Insurance Exchanges at the U.S. Department of Health & Human Services, where he worked closely with states to develop the regulatory framework for the health insurance exchanges.

Health insurers who plan to participate in the individual market in 2018 must begin setting their rates in the spring of 2017, Ario explained. If a repeal becomes law, he said, it would take two years and possibly three years for it to take effect. This time gap would lead to more insurers exiting the individual marketplace and difficulty for remaining insurers to set premiums.

The timing of a replacement plan also would have political ramifications for Congress, Ario said. If a replacement takes effect in 2019, he said, open enrollment would take place in 2018 and it could influence the 2018 midterm elections.

A delayed replacement, however, would have a different set of ramifications. It would necessitate grandfathering of existing coverage, would lead to perennial delays through a process similar to the Medicate Sustainable Growth Rate to control spending, and would require expansion of ACA Section 1332 which permits states to apply for waivers to pursue other strategies to provide their residents with health care.

The individual market – with a total enrollment of 21.8 million people - represents a relatively small segment of Americans who have health coverage. But it is the market segment most at risk for coverage disruption under “repeal and replace,” Ario said. Repealing the individual mandate and the tax credits could require corrective action to avoid a market collapse while an ACA replacement is implemented.

The largest segment of insureds – those with employer-sponsored health coverage – is the least at risk of disruption, Ario said. That market segment is likely to remain stable although the Republicans propose capping the employee tax exclusion.

It’s possible that Congress and President-elect Donald Trump could employ a mix of repeal and rollback strategies, Ario said. Pieces of the ACA that could be on the menu for Congressional repeal would include tax credits, the individual mandate, the employer mandate and all ACA taxes. The administration could force rollbacks in the areas of benefits, ratings and coverage of pre-existing conditions.

The individual mandate and tax credits are the two key issues that Congress and the new president will consider in any ACA replacement proposal, Ario said. As an alternative to the unpopular mandate, enrollees could be required to maintain continuous coverage to have all their health conditions covered at standard rates. One proposal introduced in Congress would have tax credits vary by age instead of by income and would be made available through private websites.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].