Health insurers quietly shape Obamacare replacement with fewer risks

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By Caroline Humer and Susan Cornwell

<span class="articleLocation”>U.S. health insurers are making their case to
Republican lawmakers over how Americans sign up for individual
insurance and pushing for other changes to shape the replacement
of former President Barack Obama’s national healthcare law.

The health insurers, including Independence Blue Cross and
Molina Healthcare Inc, are also recommending ways to put
more control over insurance in the hands of states as the
federal oversight of Obamacare is dismantled. They emphasize
that it is crucial to keep government subsidies for low income
people.

These changes, described by executives, high level officials
in the health insurance sector and lawmakers in nearly a dozen
interviews with Reuters, include pushing for more strict
enforcement of eligibility for these plans.

Because Republicans are just starting to work with the new
Trump administration and the debate is fluid, it is not clear
ultimately what changes will take hold. But some of these ideas
have started to surface in early Republican legislation, such as
a co-sponsored bill from Maine Senator Susan Collins that would
keep subsidies.

The moves underscore that private insurers are quietly
working on how to benefit under the Trump administration, which
is focusing on deregulation in healthcare, energy and
manufacturing. And they show that insurers want to save aspects
of Obamacare individual plans, but cut down on the risk to their
own bottom lines and any hikes in premiums that threaten the
viability of this insurance market.

This market for individual insurance covers about 10 million
people and is small compared to the employer-based system that
covers more than 160 million Americans and the government-paid
programs for over 120 million people.

But it is one that insurers have described as having growth
potential. While Obamacare cut the uninsured rate to 11 percent,
there are still millions of uninsured Americans. The largest
U.S. insurer UnitedHealth Group Inc told investors
recently that it sees opportunities in new state-based markets
and is talking to policymakers.

Many investors believe that the Republican deregulation push
with Trump will benefit insurers.

“Clearly they support the private insurers and the role that
they are going to play in any sort of new market,” said Jeff
Jonas, a portfolio manager at Gamco Investors in Rye, New York,
which he said owns the publicly traded insurers.

INFLUENCING WHAT “REPLACE” LOOKS LIKE

President Donald Trump campaigned on a promise to repeal
Obama’s national healthcare law on his first day in office. He
and Republicans have not presented an agreed upon replacement
plan, but key issues they are expected to address include the
law’s requirements for individuals to have insurance.

Insurers’ main “ask” takes into account replacement plans
under discussion in Congress, and largely assumes that
government funds will continue to subsidize health benefits, at
least for the next two to three years.

Daniel Hilferty, CEO of Independence Blue Cross in
Pennsylvania, told Reuters that he advocated tightening the
rules around signing up for insurance outside of the open
enrollment period, and tight control of which third parties are
allowed to pay premiums for patients.

Independence is part of a nationwide network of Blue Cross
Blue Shield licensees such as Anthem Inc and has
enrolled more than 300,000 consumers in individual plans.

Hilferty’s requests, echoed by other people in the industry
who did not want to be named, are similar to demands the
industry made of Obama. Enrollment outside of the regular period
– and third-party groups that keep poorer, sicker patients in
the private market by paying their premiums – has helped lead to
hundreds of millions of dollars in losses for insurers and
pushed three of the nation’s largest players out of the
Obamacare market.

In addition, Independence is also asking for a bigger role
in signing up new customers who want to buy individual plans.
Insurers sell plans both on the exchanges and off the exchanges,
but subsidized plans are currently mostly sold on the government
run HealthCare.gov and on state-run websites in a dozen states.

“It would be really helpful if we in the industry played a
more significant role in the actual enrollment process,”
Hilferty said.

Trump signed an executive order on Friday directing the
federal government to scale back regulations, taxes and
penalties related to the law. But the directive did not change
the priorities outlined to Reuters by the insurers and industry
sources, they said.

FOCUS ON THE MANDATE, COST SHARING

Insurers have built their list of top priorities assuming in
part that Republicans will try to overturn the existing
individual mandate, which requires Americans to pay a fee if
they do not have insurance. A replacement plan would need to
include some type of bonus to entice healthy people to get
insurance.

That, they say, would be a step towards a good mix of sick
and healthy people that will keep the plans profitable. Ideas
include creating high-risk pools to keep the very sick in a
separate market and offering low prices to the young and
healthy.

Without a punishment for not buying insurance that is like
the individual mandate, the market can’t survive, according to
Dr. J. Mario Molina, Chief Executive Officer of Molina
Healthcare Inc, a company that provides Medicaid for the
poor and individual insurance plans on the exchanges.

“It probably needs to be a combination of both an incentive
and a penalty,” Molina said.

Insurers also want to keep the cost-sharing subsidies that
have made healthcare costs affordable for millions of people as
well as the premium subsidies that help to reduce the monthly
cost for people with low incomes. Those subsidies are part of a
court case filed last year that is on hold.

“If it’s free or close to free, you are more likely to sign
up in the absence of the mandate,” said Dan Mendelson, CEO of Avalere Health, a research group and consultant that advises
health insurers and is part of Inovalon Holdings.

Insurers also want continued premium subsidies, skewed to
keep up enrollment of younger people.

“I think if you don’t have the subsidies, then the whole
thing falls apart,” said Molina.



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