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Death Spiral: Humana Completely Abandoning Obamacare Marketplaces After 2017

One of the primary points made by President Trump, Speaker Ryan and others in emphasizing the need to uproot and supplant Obamacare is that the law continues to fall apart under the weight of its own unworkability. That ugly reality has been underscored repeatedly, by sharply rising premiums, by soaring out-of-pocket costs, by increasingly severe access restrictions for consumers, and by the departure of a conga line of major providers. It's failing, and its inherent flaws are only going to get worse. It's going to hurt even more people -- and it's already harming significantly more Americans than it's helping. Do nothing, and the deleterious status quo deteriorates even further. That would be unfair, irresponsible governance. Republicans have campaigned on 'repeal and replace' for four consecutive election cycles, over which period they've won historic landslides; they now control most levers of government at virtually every level. They have a mandate to undo the Democrats' unpopular experiment and implement a better system. Evidence that Obamacare continues to falter keeps pouring in, and this latest development follows a predictable and established pattern dating back several years at this point. The law is a mess:


Health insurance company Humana announced Tuesday that it would leave the ObamaCare market in 2018. The insurer said it would offer plans through 2017, but that the market has not stabilized enough to participate next year. Humana said it was losing money from taking on too many sick people without enough healthy people to balance the pools. The decision came after Humana scaled back participation and raised premiums, among other changes. "All of these actions were taken with the expectation that the company’s Individual Commercial business would stabilize to the point where the company could continue to participate in the program," the company said in a statement. "However, based on its initial analysis of data associated with the company’s healthcare exchange membership following the 2017 open enrollment period, Humana is seeing further signs of an unbalanced risk pool."

This is the opposite of a surprise. Indeed, industry experts have been anticipating precisely this sort of continued spiral unless Obamacare's actuarial picture brightened considerably. It has not. In fact, this year's open enrollment period yielded a notably weak number of sign-ups, likely falling well short of already-downgraded projections.  Congressional Republicans are in the process -- which does seem endless, in some ways -- of settling on a unified piece of "repeal and replace" legislation.  But some conservative lawmakers are getting antsy, and are beginning to demand that leadership simply ram through basically the same repeal bill (without a replacement) that passed both chambers last year:


House conservatives — anxious that the GOP’s effort to end Obamacare is getting bogged down in the fight over what a replacement should look like — are plotting a major push to repeal the law immediately without simultaneously approving an alternative. The House Freedom Caucus and a number of Republican Study Committee members this week will urge Speaker Paul Ryan (R-Wis.) and his lieutenants to forgo their plan to add replacement provisions to a repeal bill, dubbed “repeal-plus.” Instead, they want to approve the same stand-alone repeal bill that Congress sent to President Barack Obama in 2016...The stand by several dozen hard-liners comes as House GOP leaders were planning to outline the main planks of a replacement blueprint at a series of informational sessions with rank and file members Tuesday and Thursday. The position is at odds with GOP leadership’s latest strategy to load up a spring repeal bill — which could pass both chambers on party lines using a tool called reconciliation — with as many replacement provisions as possible. The split in the conference s shows that even after six years of demanding repeal — and a month of unified government — Republicans are still struggling to get on the same page on how to do it. Some are urging patience and deliberation, while others are increasingly restless the all-GOP Congress risks blowing an opportunity to kill the health care law unless they move quickly.


I'm sympathetic to the "hardliner" point of view for several reasons: First, millions of people are hurting under this law, and there's a reason why the GOP has enjoyed such massive electoral success while running against it.  People expect them to keep their promise, which could not have been any more unambiguous.  Also, if these deliberations and processes spill into next year, it becomes likelier that anxious lawmakers representing swing seats may blanch at the prospect of taking high-stakes healthcare votes during an active election cycle.  Thus, the sense of urgency.  That being said, ending Obamacare without any bill to help people in its aftermath isn't responsible policy -- and it's extremely unwise from a political perspective.  The American people are behind "repeal and replace."  They're not in favor of "only repeal."  Voters want a plan that will help bring down costs and make care more accessible, while helping society's most vulnerable members, including people with pre-existing conditions.  They also favor certain boutique elements of the current law, such as the "26 year old" provision.

Certain GOP members from deep red districts may not care, but repeal without replace is electoral suicide for the party as a whole. Democrats would love to pin a post-repeal (absent "replace") fiasco on Republicans. They've said so explicitly. That's why the approach being pursued by Ryan and the relevant chairmen is the most long as it doesn't drag on indefinitely. Real, tangible progress must be made.  Meanwhile, the Trump administration has torn a page out of the Obama playbook by announcing that it will not strictly enforce the individual mandate tax.  This is the sort of "enforcement discretion" the previous president loved to exert in order to quasi-nullify laws he didn't like.  This will help the many consumers who can't afford the "Affordable" Care Act (and who currently have to pay a fine/tax for the "privilege" of remaining uninsured), but it will also further undermine the stability of the law:


The change may seem minor. But it makes it clear that following Trump's executive order, the agency's trajectory is towards a less strict enforcement process. Although the new policy leaves Obamacare's individual mandate on the books, it may make it easier for individuals to go without coverage while avoiding the penalty. Essentially, if not explicitly, it is a weakening of the mandate enforcement mechanism.

It's just not working.

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