Humana's decision to exit the Obamacare exchange market in 2018 is setting off alarm bells for health insurers and regulators, even as the Trump administration issues new rules to try to stabilize the exchanges.
"I think you will see a lot more withdrawals," said Aetna CEO Mark Bertolini, at a Wall Street Journal health care event, one day after Aetna and Humana agreed mutually to end their merger agreement.
"There isn't enough money in the ACA as it's structured, even with its fees and taxes, to support the population that needs to be served," he explained, adding that without government funding, similar to Medicare, to help insurers with the costs of covering patients with high medical bills, the exchange market will not work. "It is in a death spiral."
Separately, the health department released Wednesday a set of rules for 2018 that, among other things, tightened enrollment rules in an effort to prevent people from signing up for coverage and then dropping it after incurring high medical bills.
"I think we should be encouraged by the signal that the administration wants to stabilize the market," said Andy Slavitt, the former director of the Centers for Medicare and Medicaid under the Obama administration, but he thinks insurers need much more clarity on bigger issues.
"Right now, the greatest uncertainty is whether or not the individual mandate, which is the principal driver to help keep costs lower, is going to be enforced," he explained. "Within the next month, insurers have to start submitting rates and deciding where they're going to participate. It's very hard to do that if you don't know the rules of the road. It's very hard to do that if you don't know how your competitors are interpreting the rules of the road."
Humana's decision to pull out of the individual market is hitting hard in Tennessee, where the firm is currently the only insurer offering coverage in three of the state's largest metropolitan communities, including Knoxville. State health insurance officials are already scrambling to deal with the fallout.
"We are looking to continue conversations with Humana about our specific unique circumstances… having no option for those 40,000 Tennesseans if they withdraw from the Knoxville area," said Julie Mix McPeak, the state's insurance commissioner, "but also trying to talk to other insurers… to see if they might be willing to expand coverage to make sure we don't have uncovered areas."
Two weeks ago, McPeak testified at a congressional hearing on health reform, and she urged Congress and the administration to act quickly to address the uncertainty weighing on the individual insurance market because insurers face a federal deadline to submit rates for next year by the beginning of May.
McPeak said the stakes are even higher, after Humana's exit from her state.
"We are in such a compressed time schedule for 2018," she said. "Either we need to relax the time requirements put on us by HHS, or we need to provide additional certainty to the marketplace because we're really running out of time."
On Wednesday, federal health officials said they intend to release a revised proposed timeline for Obamacare plan rates to be certified. That move would give insurers more time to implement changes that officials are proposing for rules about Obamacare plans.