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- 04/28/17--06:28: Insurance companies are freaking out about Trump's Obamacare threats
- 08/03/17--11:24: Obamacare just got a one-two punch of bad news
Republicans have unveiled their package to overhaul the Affordable Care Act, and at least one CEO of a health insurer is wary that the plan could lead to massive premium hikes.
In an interview with The Wall Street Journal, Mario Molina, the CEO of Molina Healthcare, predicted that the new AHCA would cause an increase in the cost of premiums for people in the individual insurance market.
Molina's firm provides a large offering of managed Medicaid plans for the government and is also active on the individual health-insurance exchanges set up by the ACA in nine different states.
In the interview with The Journal, Molina said premiums for the more than 12 million people in the individual insurance market could skyrocket by more than 30% next year. In 2017, the benchmark silver plan in the same market increased by 25%, which was decried by many GOP lawmakers, including President Donald Trump.
"You're going to see big rate increases, and you're going to see insurers exit markets … this is going to destabilize the marketplace,"Molina told The Journal.
Molina Healthcare was also one of the most successful insurance companies on the Obamacare exchanges. Using its stripped-down plans modeled on Medicaid offerings, unlike other large insurers that modeled their plans on more expensive employer coverage, the company turned a profit on the exchanges over the past few years.
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Insurance companies are getting nervous about President Donald Trump's saber rattling on healthcare.
Trump, in interviews and tweets in recent days, has raised doubts about whether the White House will continue to fund the Affordable Care Act's so-called cost-sharing reduction (CSR) payments.
CSR payments are provided to insurers to defray the cost of offering low-income Americans cheaper out-of-pocket costs on the ACA's individual insurance exchanges. The money is funneled through the plans to providers to make up the difference in copays or deductibles paid by Americans making 200% of the federal poverty line or less. Any money not used to lower the costs is returned to the federal government.
Currently, the roughly $8 billion in payments comes from the White House rather than a congressional appropriation. The payments have been the subject of a lawsuit between the Republican-controlled House and the executive branch dating back to the Obama administration.
Trump's recent threats to cease the payments have caused insurers and industry groups to grow increasingly worried about potential losses and their participation in the individual insurance markets.
Anthem, one of the big five public insurance companies, said Wednesday that if CSR payments are not funded, they could either raise premiums in the individual market by as much as 20% or leave them altogether.
Anthem CEO Joe Swedish said on the company's earnings call that it was making the assumption that CSR payments would be funded. He said the company's outlook would change if the payments are pulled.
"However, we are notifying to our states that, if we do not have certainty that CSRs will be funded for 2018 by early June, we will need to evaluate appropriate adjustments to our filing," Swedish said. "Such adjustments could include reducing service area participation, requesting additional rate increases, eliminating certain product offerings or exiting certain individual ACA-compliant markets altogether."
Other major insurers such as Aetna and Cigna also warned earlier in the year that their participation in the exchanges would be based on the payments. Aetna already announced it would pull out of Iowa's marketplace.
Mario Molina, the CEO of Medicaid-focused insurer Molina Healthcare, wrote a letter to congressional leaders on Thursday about the CSR payments. He urged House Speaker Paul Ryan, House Minority Leader Nancy Pelosi, Senate Majority Leader Mitch McConnell, and Senate Minority Leader Chuck Schumer to fund the CSR payments for the next two years.
"If the CSR is not funded, we will have no choice but to send a notice of default informing the government that we are dropping our contracts for their failure to pay premiums and seek to withdraw from the Marketplace immediately," Molina wrote.
In the letter, Molina — whose company has turned a profit from the exchanges — said without the payments, the company would have to immediately drop up to 700,000 marketplace enrollees if the payments were ceased and 1 million people would lose their coverage in 2018.
Major lobbying groups have also pleaded with the administration and congressional leaders to continue the payments.
Groups including America's Health Insurance Plans, American Medical Association, American Hospital Association, Blue Cross Blue Shield Association, and the US Chamber of Commerce sent a letter to lawmakers to urge them to continue CSR funding.
"As medical professionals, insurers providing health care services and coverage to hundreds of millions of Americans, and business leaders concerned with maintaining a stable health insurance marketplace for consumers, we believe it is imperative that the Administration and Congress fund the cost-sharing reduction program," the letter read.
The Trump administration told congressional leaders on Wednesday that it would continue to fund the payments for now, but did not make a longer-term commitment that many insurers feel they need to plan for 2018.
Insurers have to submit their plans for 2018 plan year coverage on the exchanges by late June or drop out of the markets.
(Reuters) - Molina Healthcare, a health insurer that specializes in the Obamacare and Medicaid healthcare programs for low-income and poor people, plans to cut about 1,400 jobs in the next few months, according to an internal company memo reviewed by Reuters.
Molina's decision comes after it reported a first-quarter loss related to the individual plans created under former Democratic President Barack Obama's healthcare law, and then fired its Chief Executive Officer Mario Molina a few months later.
Molina shares closed down 0.8 percent at $70.60 on Monday. The shares are up 38 percent since May 2, when the departure of Mario Molina and his brother, CFO John Molina, was announced.
The memo was sent to employees by Molina's Interim CEO and CFO Joe White, who said that the cuts, which represent 10 percent of its 6,400 corporate employees and 10 percent of 7,700 health plan jobs, aim to contribute to savings by 2018.
The cuts, part of what White called "Project Nickel," do not include the company's Pathways behavioral health business, which employs about 5,500 people.
"Moving forward, we must be exceptionally strategic in doing more with less," White said in the memo.
Molina and other insurers are facing an upheaval in the insurance business as Republican lawmakers seek to follow through on their promise to repeal and replace Obamacare. Molina is among insurers pressing the Senate to reconsider their plans to cut the Obamacare program and decrease the size of the Medicaid program.
Long Beach, California-based Molina in February reported a fourth-quarter loss of $91 million, which it attributed in part to higher-than-expected patient costs on the exchanges created under Obamacare. The company sells these plans in nine states.
The Molina brothers, sons of the company's founder, were replaced on an interim basis with White, who was Chief Accounting Officer at the time.
(Reporting by Caroline Humer; Editing by Nick Zieminski)
Two high-profile insurers said they would make changes to their Obamacare-related business next year, adding to the uncertainty surrounding the future of the law formally known as the Affordable Care Act.
Molina Healthcare said it would exit the Obamacare individual insurance exchanges in Utah and Wisconsin due to lagging financial performance.
"Looking back on our involvement in Wisconsin and Utah, the populations in those states were probably not significant enough to move the needle for the company in a positive way," CEO Joseph White said during the company earnings call Wednesday. "The cost experience certainly moved it in a negative way. But, frankly, I think the markets there were just so small as to just not offer a lot of upside."
Molina, which has been relatively successful on the exchanges, is in the midst of a restructuring after firing its CEO and CFO in May. Both of the executives were sons of Molina founder David Molina.
White did say there were some exchanges were positive contributors to Molina's bottom line, but the company is reviewing all of its marketplace offerings to make sure it is being as efficient as possible.
"There's no doubt performance in Texas has been very nice," White said. "Performance in some of the smaller states, Michigan and New Mexico, has been nice. California has been okay. Florida, though, has not been a good market for us. We're going to have to look closely at it."
In addition to the Molina news, insurance giant Aetna said Thursday that it would not offer 2018 exchange plans in Nevada — the last market where it was considering offering Obamacare plans. The firm filed to potentially offer plans in the state back in June.
The company's CEO, Mark Bertolini, said in an earnings call that the company was terminating a Medicaid contract with the Nevada government due to low enrollment. Insurers in a state's Obamacare exchanges typically receive some breaks in the Medicaid market, so without the Medicaid contract, there was little reason to continue to offer exchange plans.
"Our 2018 participation was required based on a Medicaid contract with the state," TJ Crawford, an Aetna spokesperson, told Business Insider in an email. "As a result of terminating that contract for unrelated reasons, we will not have a presence on the individual exchange in Nevada, and will have no on-exchange presence anywhere in 2018."
Aetna was only planning to offer plans in a handful of counties in the state, none of which were the potentially bare rural counties, making the scrapped plans mostly a symbolic blow.
But the moves come as the future of Obamacare continues to be in doubt. Weak financial performance has led to many major insurers to pull out of the exchanges over the past two years, raising doubts over the future of the marketplace. However, a recent study by the Kaiser Family Foundation, a nonpartisan healthy policy think tank, found that for the insurers that remain the markets are stabilizing and that profits should begin to materialize.
Despite this, numerous insurers and state insurance commissions have cited uncertainty over future policy from the Trump administration and Congress as a reason to exit the exchanges or raise prices.