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Lots of places have just one Obamacare insurer. What if that falls to zero?

Obamacare’s looming “empty shelf” problem.

Photo by Joe Raedle/Getty Images

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White House staff huddles on key Obamacare payments

Multiple sources tell me that White House staff held a meeting today to discuss cost-sharing reduction subsidies — that $8 billion Obamacare program whose fate still hangs in limbo. Ending these payments could "blow up" the health law's marketplaces, but President Trump has so far waffled on what he'll do about the issue. The meeting didn't include any outside advisers or industry officials, only administration staff.

Tomorrow, Health and Human Services officials will meet with health insurance executives — who really want to know where the administration stands on this issue.

Insurers probably won't get a firm answer on cost-sharing reductions tomorrow. A seasoned HHS observer points out that it is typically agency policy not to reveal news that could move markets during stock trading hours (9:30 am through 4 pm in the United States).

A change to cost-sharing reductions is exactly that kind of news. Insurers' stock would likely tank if the Trump administration revealed it did not plan to make these payments. So it's unlikely that the administration would roll out this specific policy in a private meeting and raise risks of insider trading.

Instead, it's more likely that whenever they issue a public announcement, it will be after 4 pm — a joy for all of us health care reporters, who will have to wait until the evening for any action.

The question in my inbox: what happens to Obamacare in places where no insurers want to sell?

Right now there are 16 counties in Tennessee where no health insurer wants to sell Obamacare coverage. Iowa could be next: Half its Obamacare insurers announced this month that they would no longer participate in the marketplace. That leaves 94 of the state's 99 counties with just one insurer — and regulators there aren't totally sure that plan, Medica, will stick around.

"We don't have any commitment from the two carriers that remain that they will be there," says Doug Ommen, Iowa's insurance commissioner. "They're not required to file with us until June. Certainly we're hopeful, but unless Congress acts, our market will continue to be very unstable."

A handful of Vox readers have sent me the same question about these situations: What happens if no one wants to sell coverage? Does the law have any fallback plan?

The short answer is no. There is no backup plan for places where no insurer wants to sell Obamacare coverage.

"If there was any, nobody told us about it," says Kevin Counihan, who up until January served as the chief executive of Healthcare.gov.

An Obamacare market with no sellers would leave thousands of enrollees unable to use tax subsidies to buy insurance coverage. And the government doesn't have any particular legal power to cajole carriers into setting up shop in the markets they find undesirable. The most it can do, it turns out, is ask really nicely.

"There is no lever that the government can pull except moral assuaging," Sabrina Corlette, a research professor at Georgetown University's Center on Health Insurance Reforms, told me when we spoke about the topic last year.

The "empty shelf" problem: Obamacare requires insurers to volunteer to sell coverage

Obamacare depends on private health insurance plans deciding voluntarily to sell coverage on the law's public marketplaces. And even before the election, some big insurers had decided that the Obamacare marketplaces were not good for their bottom lines. Aetna and UnitedHealth mostly withdrew in 2016, leaving lots of places with just one insurer.

Since the election, health insurers have only gotten more skittish. Humana announced in February that it would no longer participate. That left those 16 Tennessee counties without any plans, and many more counties with just one option.

Obamacare did have a backup plan to increase competition. Regulations watered it down.

There's a section in the health care law — Section 1334, to be exact — that could help in this situation.

Section 1334 requires the federal government to contract with two multi-state plans, or MSPs. These MSPs would, in theory, provide coverage in all 50 states. And that would mean every Obamacare enrollee would at least be able to choose between two plans.

That program, however, never got off the ground. There are only a handful of insurers that have a network of doctors and hospitals that spans from coast to coast — a prerequisite for running a national plan. From the get-go, the federal government only found one insurer willing to participate in the MSP program, Blue Cross Blue Shield.

And BCBS hasn't been able to scale up its nationwide coverage as quickly as the law envisioned. In 2016, it sold MSP coverage in 32 states. "The experience of the first three years of the program has demonstrated that providing nationwide coverage for any issuer or group of issuers is difficult to achieve," a January 2016 memo from the Office of Personnel Management observed.

That same memo officially relaxed the rules for the MSP program: It announced that plans would not have to cover all states in 2017, as the law had envisioned. And it encouraged other health plans to apply to join the program, "whether or not they can commit to a four-year schedule for nationwide coverage."

The government's best tool? Asking very, very nicely.

Counihan told me about what happened last year, when he was running Healthcare.gov and they worried about the possibility of "empty shelf" counties. There was one county in particular — Pinal County in Arizona — where all health plans had pulled out. Other places with just one health insurer were at risk too.

So Counihan spent two months on the road, meeting with insurance executives and regulators to make sure at least one plan signed up.

"It ended up becoming very on the ground," he says. "I ended up going to every market that was at risk. I ended up speaking to a CEO of an insurance company daily and to a commissioner of a state insurance department three times a week."

He said those calls were necessary because his department needed to know where the risks were and reassure health insurers that were on the fence. He underscored that it took lots and lots of work to make sure that no county ended up with an empty shelf. It did work; so far, we've had no cases of areas being left without an Obamacare plan.

But what happens under the Trump administration is still a really open question. Given the administration's opposition to Obamacare, it is hard to see officials putting in the same level of work to save a law they want to wipe off the books.

Chart of the Day

Pew Research

A new Pew poll reveals a growing gap between how much Americans trust each party on health care. Pew finds a 19 percentage point advantage for Democrats on the issue, the largest the nonprofit has seen since Congress began debating health reform in 2009.

Kliff's Notes

With research help from Caitlin Davis

  • "Insurers scramble to price plans as health exchange policy seesaws": "At Sanford Health Plan, which offers ACA plans in North and South Dakota, actuaries are using 'multiple scenarios' in developing rates, said Kirk Zimmer, executive vice president. 'We spend a lot of time looking at media and social media to see if we can glean any useful information,” he said. 'It’s a struggle to keep up.'" —Anna Wilde Mathews, Wall Street Journal
  • "Obamacare's Insurers Struggle for Stability Amid Trump Threats": “Insurers contacted by Bloomberg — including Anthem, Cigna, Aetna and Health Care Service Corp., which offers plans under the Blue Cross Blue Shield brand in five states — declined to commit to selling Obamacare plans next year. Companies are sometimes reluctant to discuss strategy before regulators review their filings, and the lack of a commitment at this point doesn’t mean they’ll drop out.” —Zachary Tracer and Anna Edney, Bloomberg
  • "Supreme Court rejects new Obamacare case": “The lawsuit challenged the administration for not enforcing statutory requirements for healthcare plans after insurers canceled millions of plans in fall 2013 before the first open enrollment. The requirements included the mandatory essential health benefits that must be in every plan.” —Robert King, Washington Examiner