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President Trump / HSS Secretary, Tom Price, M.D. / Source: Wikimedia Commons

“Obamacare is gone. Just gone”

Robin Young • Tue, April 18th, 2017

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“If Congress doesn’t approve it, or if I don’t approve it, that would mean that Obamacare doesn’t have enough money so it dies immediately as opposed to over a period of time," Trump told the Wall Street Journal last week. If the payments don’t get made, he said, "Obamacare is gone, just gone."

Current federal appropriations expire on April 28, and a partial government shutdown would follow if Republicans and Democrats cannot agree on how to extend funding.

Oh, and all health insurers have to file their 2018 rate plans with each state insurance commissioner by May or June (depending on the state).

They don’t know what to file.

Do they assume that the current ACA (Affordable Care Act) status stays the same?

Do they assume that “Obamacare is gone. Just gone.”?

John Salciccioli, director of actuarial services for commercial business at Independent Health, a nonprofit, New York-based insurer, told The Washington Post that his plan was looking hard at the possibility that the individual mandate goes away.

His company must make its rate filings in early May.

“What we have to file is kind of assuming status quo, everything as it is will still be in place in 2018,” Salciccioli said. “It’s my belief, or my hope at least, if something came down after we filed, they would at least hopefully allow us to take another look at rate increases and make adjustments after the fact.”

The ACA Kill Switch

Twenty million Americans signed up for the Affordable Care Act. To stay affordable, the plan mandated that healthy young people sign up, pay premiums and that the federal government provide a subsidy to insurers to help reduce the deductibles and co-pays for seven million lower income Americans.

House Republicans successfully challenged the low income subsidy in court last year. But the Obama administration kept the subsidy in place while the lawsuit was under appeal.

If Trump, through his HHS Secretary, Tom Price, M.D., stops those payments then insurers can either exit the market or raise premiums. Probably by at least 15%.

“This is a very potent threat, because the administration has the authority unilaterally to do this, and this is really a kill switch. This makes the program unprofitable for the majority of health plans operating in it today,” said Dan Mendelson, chief executive of Avalere Health, a consulting firm in an interview with The Washington Post. “The timing of this threat is really curious, in the sense that now is the time that the plans have to be deciding whether to bid on 2018.”

Pucker Factor

In Trump’s Wall Street Journal interview on April 12th, he described in detail how he and Secretary Price could collapse the Affordable Care Act by withholding those funds.

On Tuesday, April 18, insurers will be meeting with Seema Verma, administrator of the Centers for Medicare and Medicaid Services (CMS). The insurers slated to attend are the lobbying groups America’s Health Insurance Plans and the Blue Cross Blue Shield Association, as well as individual insurers such as Molina Healthcare.

Top on their agenda are the looming state filing deadlines and the subsidies for the seven million people who qualify under ACA.

There is almost no time left.

State of Washington Insurance Commissioner Mike Kreidler set May 5, 2017, as the date that health insurers must file their proposed plans and rates for 2018. Other state commissioners have set dates in May or June.

Kreidler said, when setting the deadline that he wanted to reassure the insurance-buying public that he is committed to stability in his state’s insurance market. Furthermore, he added “Insurers and consumers are understandably concerned about stability because of the uncertainty in Congress over changes to the Affordable Care Act (ACA) and no viable replacement.”

The May 5 deadline marks the formal start of Kreidler’s review of individual and small-group health plans and stand-alone dental plans for 2018.

Said Kreidler, “The sooner insurers file plans, the quicker we can review them and have a viable market available for Washingtonians.”

But insurers are not filing plans with the states because they have no idea what’s going to happen with the Trump and Price Administration.

The default, no risk position for risk-averse health insurers is to simply exit ACA.

It’s the health insurance industry’s pucker factor time.

How It Affects Orthopedics

Unless Trump pirouettes (which is entirely possible) or the Democrats, who’ve made the subsidy a top priority in the federal budget negotiations with Republicans and the White House, extract a commitment from the Trump Administration to fund the cost-sharing reduction payments—and fast—then seven million Americans are likely losing insurance.

As the following three charts illustrate, the passage of the ACA coincided with a sustained increase in orthopedic surgeries.

Source: Public company sec filings, various Wall Street Analyst reports and RRY Publications, LLC

Source: Public company sec filings, various Wall Street Analyst reports and RRY Publications, LLC

Source: Public company sec filings, various Wall Street Analyst reports and RRY Publications, LLC

The ACA, we think, created a measurable increase in sales of orthopedic implants and instruments between 2012 and 2015.

Losing the ACA would certainly reduce demand for orthopedic services and implants.

Musculoskeletal problems comprise 18% of all office visits and one in two Americans have some sort of musculoskeletal complaint according to the American Academy of Orthopedic Surgeons.

Extrapolating to seven million people, that would imply 1.3 million musculoskeletal office visits would be, to paraphrase Trump, “Gone. Just gone.”

One Republican healthcare lobbyist, who spoke to The Washington Post on the condition of anonymity to speak candidly, said that insurers are confused and trying to read the tea leaves of Trump’s statement.

“From an insurance standpoint, the biggest thing is stability for the plans that are deciding whether to remain, and if you don’t have the cost-sharing subsidies for 2018—and they have to file rates and make final decisions by June or July—I think it’s going to be very hard for many plans to stay in,” the lobbyist told The Post.

Price’s HHS Plays With Deadlines

Secretary Price, who has vowed to kill the ACA, issued a new healthcare market stabilization rule on February 15 which set a series of new rate filing deadlines.

Some were extended, some were shortened.

Bottom line, they added new complexity to the process of deciding whether to remain in the ACA or to exit.

The deadline for filing qualified health plan (QHP) applications and rate table templates for coverage that includes a QHP was delayed from May 3, 2017 to June 21, 2017.

After that date (June 21), CMS deadlines eased up while insurance company deadlines were compressed.

CMS gave itself until August 2 instead of the earlier date of June 13 to give insurers notice as to corrections they will need to make in their applications. And CMS now can wait until September 15 to send its final correction notice to QHP insurers with a final list of plans rather than September 11.

CMS also gave itself an extra 20 days to send its final certification notices to QHP insurers.

Furthermore, the states were given an extra 12 days to send their final recommendations regarding QHPs to CMS.

But then CMS cut five days out of the schedule for insurers to petition to change their service areas. And CMS also moved the final deadline for insurers to petition to make changes in their QHP applications from August 21 to August 16. And the end of the limited window, during which insurers can correct data errors identified by the states or HHS, was moved up to October 7 from October 13.

Finally, insurers were given only two extra days to send their final signed agreements, confirmed plan lists, and crosswalks of 2017 to 2018 plans to CMS.

Between a Rock and No Place

So where does all this put insurers who have a matter of weeks to submit their rate and service plans to insurance commissioners around the United States?

It leaves them having to make a choice between their healthy, paying policy holders and what is increasingly looking like an ACA mirage.

Our guess is that they’ll avoid new risk and stand on the rock of their existing policy holders.

And Trumpcare would boil down to three words: Don’t Get Sick.

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