The Post-Republican Obamacare Market Will Be "Stable" and Very Profitable for Health Insurers

Predictions that the individual health insurance market will now implode are misplaced.

First, in the wake of the Republican collapse of efforts to replace Obamacare, Medicaid will continue on unaffected. The Obama Medicaid expansion is fully funded for years to come. The nineteen states that did not take the expansion will continue to be on the outside looking in as their taxpayers continue to fund the expansion in the 31 states that did expand. And, health insurers will continue to enjoy that growth in their business as states continue to benefit from the open-ended federal funding.

The individual health insurance market will not collapse.

With about 3,000 counties in the U.S., I can't give you an absolute guarantee that there won't be a few that will not have an insurance carrier serving the Obamacare market in 2018. But generally, the vast majority of people eligible for subsidies will have at least one carrier to buy from.

The Kaiser Family Foundation is out with a recent study looking at medical loss ratios in the first quarter of 2017. They concluded that "individual market insurers on average are on a path toward regaining profitability in 2017."

I wouldn't go so far as to say that participating health plans will generally make money in 2017––the first quarter medical loss ratio is always better early on as consumers satisfy their ever-growing Obamacare deductibles.

But I do think 2018 could be a decent bottom line year for most Obamacare exchange insurers. And, 2019 should be just fine.

Does this mean the Obamacare insurance exchanges are working well?

No.

Reports of the Demise of Obamacare Repeal and Replace Are Greatly Exaggerated

Many recent press reports have centered around the notion that Republicans are stuck in the mud trying to get their repeal and replace promises moving.

That line appeared to be reinforced over the weekend when President Trump said, in a pre-Super Bowl interview, that the process could draw out into next year. My sense is that what Trump was talking about was the fact that the whole process, that includes implementing the replacement, could take well past 2017. Trump, never one for getting the details right, was taken literally by the press looking to write stories about how the whole process was foundering.

Speaker Paul Ryan quickly countered in his press briefing that Republicans will legislate a repeal and replace of Obamacare this year.

As I have reported to you a number of times, that process, especially the replace part, will be very difficult to achieve given the need to have at least eight Democrats onside with a complete replace bill.

But, I can also tell you that the repeal part is still on track to occur this spring, as I have been reporting for some time, likely in March.

How Republicans and Democrats Could Come to a Bipartisan Compromise Over Obamacare

It's not a question of whether or not Republicans and Democrats will come to a compromise over replacing Obamacare.

The Republican attempts to repeal and replace aside, the law is unsustainable in its current form.

Since it will take 60 Senate votes, and the Republicans only have 52 seats, there is no way we can get to a solution to the Obamacare conundrum without a bipartisan compromise.

So, what might that look like?

See my op-ed at CNBC.com 

"Repeal and Replace" Obamacare: How Will All of This Sort Itself Out?

Will the Republicans Follow Through on Their Promise to Repeal Obamacare?
Yes.

You have probably been reading press stories that bring into question whether or not Republicans will actually keep their campaign promise to "repeal" the Affordable Care Act (ACA). In fact, there is much discussion going on among Congressional Republicans about repealing key funding elements of the ACA as part of a budget process prior to having a replacement ready to pass the Congress.

But, they will defund the core elements of Obamacare sooner rather than later on their way to replacement. They have to. Repealing Obamacare as a first priority was a core campaign promise. If Congressional Republicans and President Trump fail to do this they will suffer a precipitous drop in credibility with their base.

Do Republicans Have a Replacement Plan?

Fixing Health Insurance Reform is a Zero Sum Game: The Only Way Republicans Can Lower Costs is to Provide Less Coverage––Wrong!

Don't Underestimate the Value of Rearranging the Deck Chairs

Anna Wilde Mathews and Louise Radnofsky have a well-done story in yesterday's Wall Street Journal. They point out that a relatively few sicker people account for most of the cost of care:

Congress has begun the work of replacing the Affordable Care Act, and that means lawmakers will soon face the thorny dilemma that confronts every effort to overhaul health insurance: Sick people are expensive to cover, and someone has to pay.

That is right.

But, this statement would seem to infer, as I have observed the general discussion about fixing Obamacare has often inferred, that there is a certain cost to health insurance and that Republicans can rearrange the deck chairs any way they want but the cost will be the same.

Wrong!

What I think this story, and the general discussion about how to cover people in the future is missing, is that Obamacare is so flawed that by itself it is manufacturing plan premium levels that are at least 30% to 40% higher than they need to be.

"Republicans Are Being Awfullly Naive" About the Transition Period in "Repeal and Replace"

"To have an orderly ["Repeal and Replace"] transition, I think Republicans need to reimplement the risk corridors by February or March. That is the only chance they have. I don't think there is a single Republican member of Congress who has thought about this. I am reading all of these quotes and they're completely blind to the fiasco on the individual market that they're about to create."

Read my complete interview with Sarah Kliff at Vox.

Obamacare Repeal, Transition, and Replace: The Republicans Have a Tiger By the Tail

I wouldn't be surprised to see Obamacare more fixed than replaced before this is over. I'm not sure Republicans have really come to grips with the daunting task they face for both replacing Obamacare and managing through what will certainly be a problematic transition.

See my post at Forbes