2017 is shaping up to be a very, very ugly year for Obamacare. A year in which it may become obvious to all that the entire thing is an unredeemable failure.
Many of you surely have been paying attention to headlines regarding insurers fleeing the Affordable Care Act (ACA) exchanges due to major financial losses (despite huge premium hikes), but you may still not recognize how bad the situation really is.
Competition on the Obamacare marketplaces will decline next year.There will be significantly more places in the country where customers have no choice of health insurance because just one company signed up to sell coverage.
This is the conclusion that health policy experts have increasingly gravitated toward in recent months and weeks, as major insurance companies have announced hundreds of millions of dollars in financial losses on the Obamacare marketplaces.
President Obama promised when the marketplaces launched that Americans will find “[m]ore choices, more competition, and in many cases, lower prices.” And insurance competition did go up in the first few years of Obamacare. Between 2014 and 2015, the US Department of Health and Human Services estimated that the number of insurance carriers participating in Obamacare increased 25 percent. More health plans wanted in on a new opportunity to sell directly to consumers.
But now some of these gains are backsliding. A recent analysis shows that Obamacare’s marketplaces will have twice as many exits as entrants in 2017. Insurers have tested out Obamacare, and in some cases they’ve lost hundreds of millions of dollars.
Adelberg at FaegreBD has been tracking marketplace newcomers and departures. By his count, at least 13 insurers have announced they’ll leave the Obamacare marketplaces. This figure likely underscores the severity of the problem, as two of those insurers, UnitedHealth and Humana, sell in multiple states.
At the same time, it looks like seven new carriers will come onto the market. But those insurers tend to be smaller, typically selling in just one or two states.
This means there will be more places in the United States where consumers have less choice of plans — if any choice at all.
The Kaiser Family Foundation estimates that 664 counties will have a single marketplace insurer in 2017, up from 225 of these counties in 2016.
Meanwhile, some insurers that were initially bullish on Obamacare are turning bearish. The prime example here is Aetna, a major insurer that signed up more than 800,000 Obamacare enrollees and as recently as April called the law a “good investment.”
But on an earnings call Monday, Aetna’s views of Obamacare seemed to sharply change. Chief executive Mark Bertolini announced that the company lost $300 million on the marketplaces last year. Aetna will nix plans to expand into five additional states and will reevaluate the 15 states it currently sells in.
So it is possible that what we’re seeing right now is that the more expensive plans — the ones that offer wide networks of doctors, low deductibles, and brand-name hospitals — are getting edged out of the market. And that the type of insurance sold through Obamacare will be much more homogeneous than we realized.
Meanwhile, here’s what the insurers who are sticking with the Obamacare marketplaces are doing.
Insurers want to crank up the cost of health insurance premiums by as much as 45 percent for Illinois residents who buy coverage through the Affordable Care Act’s marketplace.
Blue Cross Blue Shield of Illinois, the most popular insurer on the state’s Obamacare exchange, is proposing increases ranging from 23 percent to 45 percent in premiums for its individual health-care plans, according to proposed 2017 premiums that were made public Monday. The insurer blamed the sought-after hikes mainly on changes in the costs of medical services.
Of course, none of this should come as a surprise. Many of us have been warning about Obamacare since the very beginning, and I’ve dedicated several posts to the topic in 2016 alone.
In case you missed them the first time, be sure to check out: