The government must shell out billions of dollars if policymakers want to stabilize health insurance markets created by the Affordable Care Act.
That's the message insurers are delivering to a Republican-controlled Congress that is busy dismantling the Obama-era law and may be reluctant to continue propping it up with federal funds.
Major insurers selling coverage in the law's markets say the government has to keep funding cost-sharing payments that reduce insurance expenses for people with low incomes. Those payments, estimated at $7 billion a year, have been challenged by Republicans in court, and President Donald Trump isn't offering any guarantees for that money beyond this month.
Insurers also want the government to pour money into a fund that helps them cover expensive claims they're seeing in the individual insurance market, where they have had a hard time attracting healthy customers to balance bills from the sick. About $15 billion annually through 2019 would help, the National Association of Insurance Commissioners told congressional leaders in a letter sent last week.
If the government fails to deliver, insurers have powerful leverage: They don't need these markets as much as the markets need them.
They could jack premiums as much as 20 percent to make up for the lack of funding or they might pull back, leaving even fewer choices in markets that have already grown thin in many pockets of the country.
Insurers with deep roots in their communities are reluctant to leave markets, but individual insurance generally amounts to a small slice of their business, especially compared to more lucrative and stable elements like employer-sponsored coverage. And most companies are doing well overall. Publicly traded insurers like Centene Corp. and the Blue Cross-Blue Shield insurer Anthem Inc. reported better-than-expected second-quarter profits this week.
Anthem CEO Joseph Swedish told analysts Wednesday during a conference call that insurers need to learn soon whether they can count on cost-sharing money for 2018. Anthem and other insurers have already made preliminary plans to return to the markets next year, but they still have several weeks to change their mind or the prices they want to charge.
"If we aren't able to gain certainty on some of these items quickly, we do expect that we will need to revise our rate filings to further narrow our level of participation," he said.
Anthem covers about a million people through individual markets or insurance exchanges in several states, including key markets like California and New York. For next year, it already has pulled out of markets in Wisconsin, Ohio and its home state of Indiana.
Swedish's warning echoes comments made Tuesday by Centene Chairman and CEO Michael Neidorff, who noted that millions of insurance shoppers could be hurt if the government funding is not preserved.
Money for those cost-sharing payments has made it into congressional bills that aim to dismantle the Affordable Care Act. But few things are certain this week on Capitol Hill, as Senate Republicans hash out their latest takedown attempt.
Swedish said Anthem has stayed in close contact with leaders in Washington, and they are well aware of the need for this financial support.
"Our sense is that stabilization is a distinct possibility," he said, adding that "so much depends on how the legislative process plays out and what stabilization rules are put into place."