Kelly Kennedy

USA TODAY

Backup provisions will even out differences among insurance pools%2C they say

Some concerned that too many older%2C sicker people will buy insurance

Insurance companies have gained too many new customers to let law fail%2C analysts say

WASHINGTON — For those who have given up on repeal of the Affordable Care Act, there's the tweeted, posted and declared hope that the law will fail.

"This law is a disaster," House Majority Leader Eric Cantor said on CBS's Face the Nation recently. "In my opinion, Obamacare is on borrowed time."

Those criticisms were repeated Monday after the Obama administration said it would delay for a year the requirement for businesses with 50 to 99 employees to provide them with health insurance.

While some Republicans say they still plan to try to repeal the law, and three GOP senators have come up with a plan to replace it, most acknowledge repeal would require a Democratic-majority Senate to take up a vote on the issue, as well as the president to sign a bill killing his own key piece of legislation. Instead, those who dislike the law say they're waiting for it to fail.

Failure, experts say, seems just as unlikely as repeal.

That's largely due to provisions of the law to protect insurers if they gain a slew of sick, expensive policyholders through new policies and don't enroll enough healthier customers to make up the difference. There is also too much money to be made by insurance companies for them to allow the law to fail.

"What exactly 'failure' means is not clear," said Ben Sommers, assistant professor of health policy and economics at the Harvard School of Public Health. Instead, he said, the question is, "Will premiums in the exchange market remain stable and low enough that people will continue to enroll over time?"

So far, at least 3 million people have signed up for private insurance through the exchanges, while 9 million more have gained insurance through Medicaid or under their parents' insurance plans. Thousands more, at least, have signed up for private plans through the insurers themselves, rather than through the exchanges.

That's a lot of business, said Sean Nicholson, professor of policy analysis and management at Cornell University. So much new business, he said, means the insurance industry will do everything it can to make the exchanges a success because they have the potential to gain tens of millions of new customers.

"It's good for the people who suddenly have access to health care, but that's also good for business for the insurers," Nicholson said. The subsidies to help pay for insurance for everyone who makes less than 400% of the federal poverty level are also a boon. "If you tell a company, 'Hey, the government is going to pay half the price of the product you're selling,' most companies are going to start salivating."

That doesn't mean they love all of it. Robert Zirkelbach, spokesman for America's Health Insurance Plans, said the industry plans to fight a tax on full-coverage plans that, while intended to pay to expand coverage and bring in more customers, may cause premiums to go up, according to insurers. They've also argued against more comprehensive coverage, as well as more relaxed rules about charging sick and older more money for insurance than they do young people.

Still, Zirkelbach said, insurers have taken an active interest in educating people about enrolling and that they're interested in making sure enrollment goes well because broad enrollment means the new reforms will work.

"Our members are reporting a very high level of interest from consumers directly through their websites," he said.

Shifting estimates

Nicholson said the government still has almost two full months to sign up 3 million people by the March 31 deadline and reach the number the Congressional Budget Office(CBO) is now using for budget projections — 6 million. The majority of the 3 million who have already enrolled signed up in one month because website glitches slowed enrollment down to a crawl for the first two months after its Oct. 1 launch. New York announced this week that it had signed up 150,000 people since Christmas. Federal exchange numbers for January are expected soon.

One estimate used to determine success or failure was the CBO's 7 million figure for new insurance customers. Since the latest estimate for new customers is only 6 million for this year, opponents of the law have cited it as a sign of failure. Bob Moffitt, a senior fellow at the conservative Heritage Foundation's Center for Policy Innovation, has cited the lower number as proof of a "death spiral" in enrollments that will result in higher premiums.

Sommers disagrees. The estimates, he said, "are pretty imprecise."

"People tend to think, 'If they get to 7 million, it's a success, and if not, it isn't,'" Sommers said. "That's pretty simplistic."

Beyond the number of new customers, Moffitt said, is the type of customer. He said it's a problem that only 26% of the first wave of enrollees were younger than 35. That means too many of the new policy holders are old and therefore more expensive. Too many people like that, he said, and "insurance would become simply unaffordable."

Backup plans

But who makes up that pool, and whether they are young and healthy, likely won't play a huge part in stability — at least in the short-term — because the law has so many backup measures built in to protect the rest of the insurance market from higher health costs, Sommers said.

"There's this idea of a 'death spiral' if you only have sick people and the markets keep rising," he said. "But it's really unlikely to happen with the ACA because there are so many other parts of the law."

Risk corridors, reinsurance and risk adjustment programs written into the law ensure that health insurance plans that attract only sick people are evened out by payments from plans that have healthier pools and that the market remains stable for individuals. Medicare Part D has similar rules in place.

The Feb. 4 CBO report said risk corridors, reinsurance and risk adjustment will bring in $7 billion between 2015 and 2024, although House Republicans conducted a hearing Feb. 5 in which they called risk corridors a "bailout" for insurers that would cost the government money.

The true impact of the law on insurers will be known once it's determined if the new policyholders actually pay their premiums, said Tim Jost, a Washington and Lee University law professor and health policy expert. So far, he said, the Department of Health and Human Services can only tell if people have enrolled for insurance, not paid for it.

"If nobody shows up, that will have serious consequences in the risk pools," he said.

A good look at the future will be how the 2015 premium rates look, Jost said.

"Are there insurers who drop out of the exchange because they can't make a go of it, or do insurers jump in if things look pretty good?" Jost said. "It's possible we could have a situation in 2015 were premiums go up and a lot of insurers go insolvent, but I don't think we're anywhere near that."

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