Anthem and Blue Crosses loom large in Obamacare talks

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By Caroline Humer | NEW YORK

NEW YORK Anthem Inc. and other U.S.
health insurers complained to the White House for more than a
year that they were losing money on people who waited to sign up
for Obamacare coverage until they were sick.

They pleaded with the Obama administration to stem their
losses by tightening up on the enrollment rules. When their
pleas went unmet, UnitedHealth Group Inc, Humana Inc
, and Aetna Inc pulled out of most of the
government subsidized health insurance market.

But now that the new Trump administration and Republican
lawmakers control the future of healthcare, the industry is
getting a new hearing. And Anthem – the last national insurer
playing big in the Obamacare market – is the loudest industry
voice in meetings with policymakers who all have pledged to
overthrow former President Barack Obama’s signature law.

President Donald Trump, who has said Obamacare coverage is too costly for customers and taxpayers, is set to meet with
insurance industry executives today.

Since the the election, lobbyists for Anthem and affiliated
Blue Cross insurers have met “24/7’’ with Republicans leading
the change effort, including House Speaker Paul Ryan and Senate
Majority Leader Mitch McConnell, according to one healthcare
industry lobbyist.

They are there “every time Senators and staffers are on the
Hill,” the lobbyist said.

Another industry source who attended some of the meetings
said lawmakers and aides were keen on hearing what the insurers
needed to stay in the market.

That clout may explain Anthem Chief Executive Joseph
Swedish’s optimism in comments to investors earlier this month
that policymakers would introduce new enrollment rules limiting
when people can opt into coverage.

“We do have some positive indicators that stabilization
could very likely occur,” Swedish said. “I am again hopeful that
our recommendations will be looked at very carefully and
adopted.”

A day later, the Trump administration took its first
concrete stab at Obama’s Affordable Care Act, proposing
regulations that would shorten the enrollment period, establish
a new eligibility verification process and force members to pay
delinquent premiums if they want to return to the same insurer.

The so-called stabilization proposal addressed many of the
industry’s top demands for shoring up the individual market and
came after Anthem said it was considering whether it would
remain in 2018.

Anthem is the largest insurer among the Blues, a collection
of companies that share a governing board, a brand and networks.
As a group, they cover the vast majority of people covered by
Obamacare.

That means they have the most at stake and a lot of
influence in shaping the future of an insurance market that
covers more than 10 million people, according to people close to
the negotiations.

“Blue Cross Blue Shield does have a larger role in
discussing changes,” said an aide to a key Republican Senator.

TRUMP’S 3 ‘R’s: REPEAL, REPLACE, REPAIR

Trump has said he wants to jettison the 2010 law that
created Obamacare and replace it with legislation that would
change access to individual insurance and the Medicaid program
for the poor.

A copy of the administration’s Feb. 10 working draft leaked
out Friday. But it was not clear whether there was enough
support for all of the measures or how it would evolve. Any
major changes aren’t likely to affect consumers before 2019.

In the meantime, Republican lawmakers are hammering out
tweaks to Obamacare they view necessary to preventing any more
insurers from exiting. They are looking at ways to limit monthly
premium increases. For 2017, the average premium went up 25
percent in these Obamacare plans, which incensed many consumers.

Anthem and other Blue Cross plans dominated the individual
market before Obamacare coverage took effect in 2014. Obamacare
remade that market and sought to stimulate competition by
financing the start up of about two dozen smaller insurance
co-ops. The Obama administration also courted big players, such
as Aetna and UnitedHealth, by forecasting rapid enrollment
growth to more than 20 million people, which failed to
materialize.

Anthem operates the BCBS license in 14 states and insures
more than 800,000 people in the Obamacare exchanges – the single
biggest portion. It said it was making a slight profit on that
business. Its rivals exited after losing hundreds of millions of
dollars last year.

Wall Street analysts said Anthem was better at pricing and
benefited from a well-known brand. Its huge pool of members also
helps Anthem drive good deals with doctors and hospitals. Still,
Anthem’s business is mostly in the employer-based market;
Obamacare customers comprised only about 4 percent of its
members at the end of 2016.

Ethan Lovell, co-portfolio manager at the Janus Global Life
Sciences fund that owns Anthem shares, said without changes to
the exchange rules, the company would likely have to raise the
average premium 20 percent in 2018, as it did for this year, to
keep from losing money.

In addition to the enrollment rules, Anthem is seeking
changes in the way payments for the sickest patients are
calculated. It also wants an extension to the planned
discontinuation at year’s end of plans that were issued before
Obamacare and that don’t meet the law’s coverage requirements.

Ed Haislmaier, senior health policy research fellow at The
Heritage Foundation, helped draft the proposed stabilization
rule Trump announced Feb. 2. He said he expected the Trump
administration to also address Anthem’s older plans.

Swedish also wants the elimination of one of Obamacare’s
most controversial revenue sources – an industry-wide premium
tax that insurers say has driven up premiums in all private U.S.
health insurance and that lawmakers agreed last year to set
aside for a year.

On January 4, Representatives Kristi Noem, a Republican from
South Dakota, and Kyrsten Sinema, a Democrat from Arizona,
introduced the Jobs and Premium Protection Act that would repeal
the premium tax; it has 145 co-sponsors.



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