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Obamacare insurers were on track to break even or 'make modest profits' before Trump killed key payments: Analysis

  • Obamacare insurers were on track to break even or make modest profits in 2017 before the Trump administration ended key reimbursement payments to them, an analysis found.
  • Prices for Obamacare plans next year would have likely risen by mid- or high-single digits in "a stable policy environment," the report said.
  • Instead, the most popular type of Obamacare plans is set to rise by 34 percent on average in 2018.
An insured patient under the Affordable Care Act receives a checkup at the South Broward Community Health Services clinic in Hollywood, Florida.
Getty Images
An insured patient under the Affordable Care Act receives a checkup at the South Broward Community Health Services clinic in Hollywood, Florida.

Obamacare health plans "were on track to break even or make modest profits" on average in 2017 before the Trump administration decided this month to end reimbursement payments to insurers, a new report says.

The analysis also said prices for Obamacare plans next year likely would have risen by just mid-to-high-single-digit percentage points on average if President Donald Trump had not for months threatened to end those payments, and if Republicans in Congress had not repeatedly tried to repeal much of the Affordable Care Act in 2017.

Instead, because of the lack of a "stable policy environment," the average price of the most popular type of Obamacare plan is rising by an average of 34 percent in most of the United States next year, the analysis said.

The report also found that the individual health plan market's "risk pool" — or mix of customers whose premiums are supposed to more than offset their respective health benefit costs — was not weakened by price hikes for Obamacare plans in 2017.

In other words, those premium increases did not "drive many healthy enrollees from the individual market," the analysis found.

The report issued Friday was written Matthew Fiedler, a fellow with the Center for Health Policy in the Brookings Institution's Economic Studies Program. Fiedler's research was conducted as part of the USC-Brookings Schaeffer Initiative for Health Policy.

It comes less than a week before next Wednesday's start of open enrollment in Obamacare plans.

Fiedler, in an interview with CNBC, said his analysis shows that "after a rocky start, this market was really on a path to stabilize."

He also said that "it's important for people to understand that what we're seeing here" with sharply higher premium prices "is not an inherent feature of this market, but a consequence of a conscious policy choice."

Both points are disputed by the Trump adminstration, which claims that Obamacare has inherent flaws that are leading to high premium prices for consumers, and to insurers exiting individual health plan marketplaces.

In an interview Monday with WKYC-TV in Cleveland, Seema Verma, administrator of the federal Centers for Medicare and Medicaid Services, said, "There's a lot of problems with the Affordable Care Act that I think are creating barriers for people to get affordable, accessible coverage."

"We had the same problem last year before the Trump administration came here," Verma said.

"If you look at last year, look at the headlines: a number of insurers leaving the marketplace, we saw double-digit increases. That's exactly the same thing that we're having here," she said. "Those problems existed before and that's because the Affordable Care Act's fundamental structure isn't working, so the exact same issues happened last year as well."

But according to his report, Fiedler's analysis "estimates that insurers were on track to incur small losses averaging 0.4 percent of premium revenue on [Obamacare]-compliant plans in 2017 before the Trump Administration ended cost-sharing reduction payments for the final quarter of the year."

And the report adds there is reason to believe that the data Fiedler analyzed "may systematically understate insurers' actual financial performance, suggesting that insurers were, in fact, on track to make modest profits" on Obamacare plans on average nationwide this year.

The Trump administration on Oct. 12 said it would no longer pay Obamacare insurers reimbursements for discounts that those insurers offer to low-income customers in their out-of-pocket health costs.

Those discounts must continued to be offered by law. But the Trump administration said the reimbursements for their costs to insurers had to be discontinued, because Congress never directly appropriated the money.

Because of threats to cut off that money in the past year, many insurers had raised their prices more sharply for 2018 plans than they otherwise would have.

A coalition of 18 states and the District of Columbia is suing the administration to compel restoration of the payments, which would be worth an estimated $10 billion to insurers next year.

A federal judge in California on Wednesday rejected an emergency request to restore the payments temporarily while that case proceeds.