File this one under "No Sh*t, Sherlock!": Insurers won't commit to 2018 w/out knowing WTF the rules will be

For weeks now I've been pointing out that just when the most recent round of unusually high (unsubsidized) rate hikes seemed to have reassured insurance carriers on the ACA exchanges that they were over the hump...just when things seemed to be settling down for next year's enrollment period...Donald Trump won the the election, triggering the Republican-held Congress to start tearing things apart left and right, throwing everything into chaos again.

On Tuesday I noted that all of this confusion and uncertainty caused by Trump/the GOP Congress has started giving heartburn to insurance executives. Again: In October, just before the election, Molina Healthcare was happy as a clam with their exchange business and projected "another solid year" ahead. And now???

In an interview, Molina said the executive order is "symbolic" and doesn't change the plans for his company, an insurer that mostly covers Medicaid members but also has more than a half million Obamacare customers. Yet when asked if Molina Healthcare would keep offering Obamacare plans in 2018, he said: "There are just too many unknowns at this point to give a definitive answer."

Why this matters: Insurance companies need to submit their 2018 Obamacare plans and rates in the next few months. Molina is a significant and profitable player in the marketplaces, and its hesitancy indicates insurers will wait as long as they can before they decide to stay in or leave. That's not exactly a recipe for a stable market.

On Obamacare: Trump cannot unilaterally eliminate Obamacare's insurance mandate and coverage penalties. They are embedded within the law and require an act of Congress. Instead, Molina is more concerned what Congress will offer up as a full-scale replacement.

Well, Molina isn't the only one popping the Tums these days. Tami Luhby of CNN Money reports:

Insurers warn: We're outta here with no Obamacare replacement

Health insurers want to see how Congress intends to replace Obamacare before they commit to offering policies for 2018, a new survey has found.

One of the biggest issues is the individual mandate, which requires nearly all Americans to buy insurance or pay a penalty. If Republican lawmakers repeal the mandate without a replacement plan, insurers said they'd "seriously consider" withdrawing from the market next year, the Urban Institute report said. They see "significant" risks in remaining while the details of a replacement bill are in doubt.

...Surveys show that as many as 40% of enrollees say they wouldn't have signed up without the mandate, the Urban report found.

"Pulling one leg out of the stool, we crash to the ground," said one respondent.

As a reminder: Here's a "3-legged stool" primer.

If the mandate were eliminated, insurers who remain would likely raise their premiums further. The prevailing industry estimate is 5% to 15%, though at least one analysis put it above 20%, one large insurer told Urban researchers.

Remember, that's 5-20% above whatever these carriers were already planning on raising their rates by.

...Even after a replacement plan is in place, insurers told Urban researchers they would need several years to implement it. One carrier said three years would be the minimum.

Here's the Urban Institute study referred to above. Choice cuts:

  • An immediate repeal of the individual mandate will not lead insurers to exit the market in 2017, in part because of their contractual obligation to remain. However, insurers reported they would “seriously consider” a market withdrawal in 2018 if the mandate is repealed without an effective replacement. Insurers reported that at a minimum, their premiums would need to increase in 2018 to reflect the likelihood of a sicker risk pool.
  • A “repeal and delay” strategy without a concurrent replacement for the ACA would destabilize the individual market. Although insurers saw value in a buffer period to adjust to a new regulatory structure and educate consumers about changes, they perceived “significant” downside risk in remaining in the marketplaces while the details of an ACA replacement are in doubt. There was no consensus among insurers about how long a transition period should be, but most insurers estimated that the task of adapting to a new regulatory framework would take multiple years.
  • The elimination of cost-sharing reduction payments in 2017 would cause insurers significant financial harm. Most insurers believed they would be forced to exit the marketplaces or the entire individual market as quickly as state and federal law would allow; other insurers indicated they would try to implement a midyear premium increase.

In other words, every damned thing I (and many others) have been warning about for months now.