Is it too late to stop a death spiral on the ACA insurance exchanges?

Dive Brief:

Dive Insight:

Talk of a death spiral in ACA exchanges had been heating up well before Republicans took control of the White House and Congress, but it is on fire right now. Aetna CEO Mark Bertolini stoked the flames with his proclamation that insurance exchange instability is only going to get worse. Meanwhile, the Trump administration is trying to turn down the heat with a series of rule changes that appeal to payers.

Bertolini isn’t saying anything that hasn’t been said before. When payers began to announce one after another last year that they would scale back participation in insurance exchanges, it prompted concern. Concern grew after the election in November, when repeal of the ACA went from a remote possibility to a distinct likelihood. Industry experts warned insurance exchanges could enter a death spiral if there were no clear path forward for health reform.

The proposed changes address several key concerns of payers and America’s Health Insurance Plans issued a statement applauding the move. These changes would require additional documentation from patients purchasing insurance outside the open enrollment period, reduce the open enrollment period from 90 days to 45 days, allow payers more leeway when setting actuarial values, and ease network adequacy regulations.

If the proposed changes are implemented and insurance exchanges survive, it will likely lead to high out-of-pocket costs for consumers and health plans with narrower networks, as The Huffington Post reported. This is not necessarily a bad thing. After all, many might argue that skimpy coverage at a high cost is better than no coverage at all. However, the proposed changes will likely deliver the opposite of what many Republicans promised: Enhanced coverage at a lower cost.

The question now is whether action taken by Republicans is too little too late. At least one large payer, Humana, has announced it will not participate at all in insurance exchanges next year. Additional factors factors not addressed by the proposed rule could motivate payers one way or the other. For instance, the fate of the individual mandate, which helps to drive younger and healthier patients to payers, will play a role. As Andy Slavitt, former CMS acting administrator, stated on CNBC with Bertha Coombs, not enforcing the individual mandate will have more impact, or is a "bigger deal," than the actions GOP have currently taken and cause more uncertainty with insurers. The Internal Revenue Service could already be easing enforcement of the individual mandate, Reason reported.


If Republicans intend to sweeten the pot for payers who remain active in insurance exchanges, they will have to take action soon. Payers have until April before they have to present health plans they intend to sell on insurance exchanges next year.

Filed Under: Payer Health Law Policy & Regulation
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