Obamacare Has Managed to Survive, But Can It Thrive?

(Bloomberg Opinion) -- November is here, and in most U.S. states that means the start of open enrollment, the sign-up period for obtaining insurance via the U.S. Affordable Care Act's exchanges. It also means we're a few days away from an election where health care has taken center stage. One thing that's likely to be strengthened, rather than put in existential peril for once, is this key part of President Obama's signature law. 

Enrollment is likely to decline modestly for the third year in a row after a GOP tax bill zeroed out the individual mandate, eliminating the financial penalty for those who didn't sign up for insurance. But if you look beyond the headline numbers, the individual market is increasingly stable, and, depending on how the midterm elections go, may only become more so under a friendlier Congress.

The market has survived years of Republican hostility. In addition to supporting an attempt at repeal, the Trump administration has slashed funding for supporting programs, helped kill the mandate, and is promoting skimpier short-term plans that could siphon healthy people from the market. 

But the ACA's price-linked subsidies for low-income Americans have helped keep it alive. Even when insurers hike premiums, many can still afford insurance. Politically, the law's protections for pre-existing conditions have become so popular that they helped derail GOP efforts to repeal and replace the law. There's a reason why many Democrats are running on health care as their opponents dissemble. And while Obamacare still faces a legal threat from a Trump-backed lawsuit put forward by a number of red states, it has survived worse in the past.

According to the Centers for Medicare and Medicaid Services, premiums for a popular set of plans went down in 17 states. If not for loosened rules around short-term insurance and the end of the mandate, premiums would likely be even lower. 

On Wednesday, Molina Healthcare Inc., an insurer with a heavy presence in the individual market that bled money last year, announced third-quarter earnings results that trounced analysts' expectations. It's not alone in its success: This is set to be the most profitable year for insurers in the program since 2011, which is driving many of them to expand into new markets. That's a major contrast from previous years marked by losses, huge premium hikes, and insurers fleeing the market. 

Stable doesn't mean healthy. There are now two very different individual markets. In one, participants are protected by scaling subsidies. In the other, people who make a bit too much money are exposed to years of compounded premium hikes. This places a cap on enrollment, and has priced many out of the market. 

But the most likely outcome for the midterms — Democrats taking back the House but falling short in the Senate — can only help. Gridlock is better than attempted murder. There would be no further attempts to kill the law in that scenario, and more oversight of the administration. 

A good result for Democrats would bode well for the other big part of the ACA, its expansion of Medicaid to more low-income Americans. Expansion is on the ballot in a number of red states, whether explicitly through a ballot initiative or implicitly through a close governor's race. And while Medicaid expansion will siphon off some patients from the individual market, they will tend to be more likely to have health problems, so the net effect would be further stabilization. 

Freed of the question of whether it will continue to exist, the individual market is finally getting closer to finding a bottom and possibly even find a way to thrive. 

To contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

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