By Anna Wilde Mathews and Melanie Evans
House Republicans' failure to pass their bill overhauling the
Affordable Care Act leaves health-care companies with continued
challenges, most acutely for insurers facing decisions about
whether to offer plans in the existing law's marketplaces next
year.
Insurers are due to begin filing 2018 plans as soon as April.
With House Speaker Paul Ryan (R., Wis.) saying he expects the ACA
to remain in effect for "the foreseeable future," companies will
still have to grapple with the instability that has affected many
of the health-law marketplaces, along with several key open
questions that will have a major impact on their decisions for next
year.
A number of insurers, including Anthem Inc., have said that if
policy makers don't take steps to steady the exchanges, they would
consider pullbacks. Humana Inc. has already declared that it is
leaving, citing evidence that its enrollment for this year wasn't
likely to generate profits.
"Tweaks have to be made in order for it to be sustainable," said
Alan Murray, chief executive of CareConnect, a New York insurer and
a unit of Northwell Health. In New York and some other states, he
predicted a cycle of rising rates and shrinking enrollment in the
ACA exchanges over time, if changes aren't made.
J. Mario Molina, chief executive of Molina Healthcare Inc., a
major Medicaid and ACA marketplace insurer, said it is still
considering retreating from exchanges next year, and he still
thinks ACA marketplaces could see double-digit rate increases.
Republicans haven't yet resolved some major issues important to
exchange insurers that will help determine how 2018 will play out,
he said.
"There are still some big unknowns," Dr. Molina said. He pointed
to the future of subsidies that help low-income people with ACA
plans pay out-of-pocket costs such as deductibles, which
Republicans haven't promised to fund. He also said insurers need to
know how stringently the Trump administration will enforce the
health law's mandate to have insurance coverage.
For some health-care sectors, the House Republicans' inability
to pass their bill will be seen as a positive. Shares of hospital
companies and managed-care firms that focus on Medicaid were up
Friday, as investors cheered the fading prospects for major
cutbacks to Medicaid and subsidies that help low-income people buy
individual plans. The GOP plan was strongly opposed by hospital and
physician groups, which said it would leave health-care providers
with more uninsured patients unable to pay bills.
Bruce Siegel, CEO of America's Essential Hospitals, welcomed the
turn of events in the House. "The good news is that we have time
now to do this and do it right," he said in an interview. Still,
Dr. Siegel said he didn't expect the House to resurrect the bill
soon. "This has been a bruising experience for everyone," he
said.
By the end of Friday, shares for HCA Holdings Inc., the largest
publicly traded hospital operator, closed 3.5% higher, while Tenet
Healthcare Corp. rose 7.4%. Shares of Medicaid-focused insurer
Centene Corp. were up 5.2% at the market's close.
For companies looking for a repeal of some of the ACA's taxes,
the bill's failure is a blow. Medical-device makers liked the
Republican effort to end a 2.3% ACA tax on sales of some medical
devices. Insurers saw upside in Republican efforts to kill a
different tax levied on their products.
"Full device tax repeal continues to hold broad bipartisan
support, and we're hopeful that no matter what next steps are
taken, erasing this tax is part of the plan," Scott Whitaker, CEO
of the Advanced Medical Technology Association, a medical-device
lobbying group, said in a statement.
But the most immediate challenge may be for insurers that sell
plans on the ACA's marketplaces. Already, they were struggling with
instability in many places, which had led to some sharp rate
increases and withdrawals.
Insurers had warned that continued uncertainty around how
Republicans would move forward will likely lead to bigger rate
increases for 2018, or further marketplace pullbacks, with
companies unwilling to gamble on the future.
A spokeswoman for America's Health Insurance Plans, a lobbying
group for insurers, said, "we feel that further steps need to be
taken for stability" in the individual insurance market.
If the ACA is left intact into next year at least, exchange
insurers still face major open questions. If no federal money flows
for the cost-sharing subsidies, some insurers are likely to leave
the market, said Deep Banerjee, an analyst with S&P Global
Ratings.
The cost-sharing subsidy "is a very big deal," Mr. Banerjee
said. He said insurers will also watch for signs of how the Trump
administration plans to handle the ACA in future -- whether the
Department of Health and Human Services will try to bolster the
marketplaces or make moves that could undermine them. "It has to be
made clear, if HHS is going to work to fix the bill and support it
or not?"
So far, the Trump administration has sent mixed signals. It has
proposed a regulation aimed at stabilizing exchanges that included
steps insurers have sought. But also, the Internal Revenue Service
has softened expected enforcement of the ACA's mandate to have
coverage. The IRS said it would continue processing tax filings
from consumers who don't say whether they met ACA health-coverage
requirements; earlier, the agency had said that this year, for the
first time, it would stop accepting such "silent" tax returns.
--Jeanne Whalen contributed to this article.
Write to Anna Wilde Mathews at anna.mathews@wsj.com and Melanie
Evans at Melanie.Evans@wsj.com
(END) Dow Jones Newswires
March 24, 2017 19:17 ET (23:17 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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