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What's Next for the Affordable Care Act?

The Senate's efforts to repeal the ACA seem to be dead, but that doesn't mean the law is totally safe.

The Senate's latest Obamacare repeal effort was dealt a lethal blow on Tuesday when Senators Susan Collins (R-Maine), Lisa Murkowski (R-Alaska), and Shelley Moore Capito (R-West Virginia) announced they would vote against a motion to proceed on any Obamacare repeal effort that doesn't include an adequate replacement. Senate Majority Leader Mitch McConnell had announced he planned to call a vote on just such a measure—an Affordable Care Act repeal without a replacement—after Senators Mike Lee (R-Utah) and Jerry Moran (R-Kansas) came out against the revised version of the repeal-and-replace Better Care Reconciliation Act on Monday night, which left McConnell short of the votes he needed to advance the BCRA.

McConnell has said he'll hold the motion to proceed to vote on Obamacare repeal early next week (even if failure is inevitable), and President Donald Trump has invited Republican senators to the White House for lunch today, where he reportedly plans to lobby holdouts to vote in favor of straight repeal.

"Let Obamacare fail, and then everyone's going to have to come together and fix it and come up with a new plan and a plan that's really good for the people with much lower premiums, much lower costs, and much better protection," Trump said on Tuesday. "And I think we're probably in that position where we'll just let Obamacare fail. We're not going to own it. I'm not going to own it. I can tell you the Republicans are not going to own it."

Polling suggests the president is wrong about whether he and the Republican party will "own" such a failure but, politics aside, there's another flaw in this plan: In most of the country, Obamacare does not appear to be on the verge of failing.

Earlier this month, the Kaiser Family Foundation looked at how insurers in the non-group markets fared in 2017. The chart below, from the brief, shows first quarter medical loss ratios (or the share of health premiums insurers paid out in claims) going back to 2011:

chart 1

In other words, after a rough 2014 and 2015, insurers, on average, started to return to profitability in 2016, and 2017 is on track to be a good year. "These new data offer more evidence that the individual market has been stabilizing and insurers are regaining profitability," the Kaiser researchers concluded.

Now for the caveats: This relatively rosy narrative doesn't hold true everywhere, particularly in rural counties around the country where insurers are exiting the marketplaces. This map, from the Centers for Medicare and Medicaid Services, shows insurer participation at the county level, as of July 12th, 2017:

chart 2

There are 40 counties across the country at risk of having no insurers participating in the ACA non-group exchanges in 2018. Insurer participation for 2018 won't be finalized until the fall, so that number could either increase, particularly if uncertainty about health-care policy in Washington, D.C., continues; or decrease, if states and the federal government work to attract insurers to those counties (as the Obama administration did when the law rolled out).

This leads to the biggest caveat of all: While Obamacare isn't failing in most places, the GOP and the Trump administration currently hold the power to deeply harm the ACA's non-group marketplaces. Already, insurers exiting the exchanges in 2018 have cited political uncertainty as a primary driver behind their decision.

Should the administration decline to pay the cost-sharing subsidies (as reports suggest it is considering) or enforce the individual mandate, more insurers might exit the marketplaces or be forced to jack up their premiums. In some states, insurers were permitted to submit two sets of proposed rate increases for 2018, one rate in which the government continues to pay the cost-sharing reductions (CSRs), and one in which the government does not. Researchers at the Kaiser Family Foundation predict that, if the CSR payments end, premiums on silver-level plans would increase by 19 percent.

At present, a handful of Republican and Democrat senators are reportedly holding discussions about bipartisan legislation to stabilize the Affordable Care Act's non-group markets. Insurers, and those who rely on the ACA's exchanges for health insurance, will no doubt be watching those efforts closely.