Insurers are fleeing Obamacare, and Trump is helping

Secretary of HHS Tom Price (left) and House majority leader Kevin Brady (right) celebrate the AHCA passing the House. Source: Getty
Secretary of HHS Tom Price (left) and House majority leader Kevin Brady (right) celebrate the AHCA passing the House. Source: Getty

The deadline for health insurers to decide whether to participate in the Obamacare exchanges in 2018 was moved from May 3 to June 21, giving insurers a little more time to decide whether to participate.

The outlook is not rosy so far. In Connecticut, for example, rates have shot up considerably for people buying insurance in the open market, and premiums have followed, rising 19% to 52%, the Hartford Courant reported.

In addition to rising medical costs, a big problem for insurers is uncertainty. Insurers have been asking themselves two big questions: Will there be enough healthy people signing up for plans and will the Trump administration continue to pay subsidies to insurers?

The Trump administration has indicated it will not enforce the ACA mandate that requires consumers to maintain coverage, so some healthy people will be less motivated to buy insurance. This makes the pools less healthy and more expensive for insurers, causing premiums to go up. According to Vox, the mandate’s weakening by the administration has caused Maryland’s CareFirst to hike premiums 15%.

Though insurers were uncertain whether the administration would continue paying subsidies the House contests as unlawful, the administration said it would in April. The future, however, is unclear—and these payments are being used for as a political cudgel. Insurance companies are beginning to run away

The market’s adverse conditions are not making insurance companies happy, and some have already announced they will not participate in the 2018 exchanges.

Exits so far:

Possible exits:

  • Medica has been rumored to be leaving Iowa, but did not respond to inquiries from Yahoo Finance to confirm its exit.

Around 32% of the 9.2 million people enrolled through ACA exchanges have only one choice of insurer according to the Kaiser Family Foundation, putting them in a precarious position should their sole insurer exit. This currently includes Alabama, Alaska, Oklahoma, South Carolina, and Wyoming. The number had increased dramatically from 7% in 2016 because of UnitedHealth leaving.

According to Axios and the Robert Wood Johnson Foundation, should Anthem (ANTM) exit all its markets in 2018, over 250,000 people will have no insurer to choose from. If Cigna (CI) or Centene (CNC) do, the number would be around 100,000 each.

With insurers exiting, some people could be left without any insurance options at all. As House Majority Leader Kevin McCarthy put it: “You know what doesn’t cover pre-existing conditions?” McCarthy said on the House floor on May 4. “A healthcare system that doesn’t have coverage. No options means no coverage.”