Insurer Exits From Obamacare Turn Few Choices Into None
Zachary Tracer
Tatiana Darie
August 16, 2016 — 5:29 PM EDT
Updated on August 17, 2016 — 8:43 AM EDT
Bloomberg
Later this year, residents of Pinal County, Arizona, who go shopping for
health insurance under Obamacare will face a peculiar dilemma -- theyfll have to
buy a product that may not exist.
The 400,000-population county southeast
of Phoenix currently doesnft have a single health insurer offering coverage next
year on the Affordable Care Actfs exchanges, where Americans can shop for the
insurance theyfre required to have under the law. With the impending pullout of
major health insurers -- including Aetna Inc., UnitedHealth Group Inc., and
Humana Inc. -- Pinal County is just one place around the country where Americans
will be left with few, if any, choices for coverage.
gThe idea was that people who use the exchanges would have a variety of plans
by different carriers,h said Robert Blendon, a health-policy professor at
Harvard Universityfs T.H. Chan School of Public Health. gIf it isnft addressed,
you will have more companies drop out and youfll have more pressure on the other
companies in terms of their potential losses.h
The dropouts also undermine a key promise of the law: multiple insurers would
compete for consumersf business each year, and the power of the market would
control costs and raise quality. Instead, the opposite is happening. Rates may
jump 24 percent next year, according to ACASignups.net, a website that tracks
the law, and a quarter of U.S. counties could have just one insurer on the
exchanges, according to Cynthia Cox, a researcher at the Kaiser Family
Foundation.
Few Choices in Many Places
It wasnft always so in Arizona. When the ACA began offering coverage three
years ago, the statefs consumers had eight health insurers to pick from, said
Swapna Reddy, a clinical assistant professor at Arizona State Universityfs
School for the Science of Health Care Delivery. In about half the statefs
counties, theyfre now down to one.
gMany insurers offered premiums that were too low from the beginning, and
they werenft sustainable,h she said in an interview. gUnfortunately, we might be
living through the one-time correction, but hopefully itfs not all doom and
gloom.h
In Pinal County, two insurers, Blue Cross Blue Shield of Arizona and
UnitedHealth, offered ACA health plans this year. UnitedHealth is leaving and
BCBS previously said it would limit its state footprint. Aetna had initially
planned to jump into the county before deciding to exit the state entirely.
While the law requires everyone to have coverage, people in Pinal County
probably wouldnft face a penalty for being uninsured. The Affordable Care Act
contains an exemption to financial penalties if therefs not an affordable option
on the exchanges.
Unstable Market
gArizona is now an example of what happens when the market is unstable,
leaving residents with little choice,h Blue Cross Blue Shield of Arizona said in
an e-mailed statement. The not-for-profit insurer said itfs re-evaluating its
coverage next year because of the Aetna pull-out.
While consumers can buy insurance outside the exchanges, they wonft be
eligible for the government-provided tax subsidies specifically targeted to help
lower-income people afford it. The average subsidy in Arizona this year is $230
a month, and more than two thirds of people on the statefs exchange
qualified.
Not Just Arizona
Itfs not just Pinal County. Entire states such as South Carolina and Alabama
may be down to one insurance option on the Obamacare exchanges, though
regulators are still reviewing 2017 filings. Parts of other states, including
Georgia and North Carolina, may be left with a single carrier as well.
Aetna announced its intention to pull out of 11 of the 15 states where it
sells individual Obamacare plans on the exchanges on Monday, after earlier
saying it faced $300 million in projected losses this year. UnitedHealth and
Humana also said the high cost of caring for sick customers helped push them
from the market.
Those exits by three of the countryfs biggest health insurers mean that more
than 2 million people may have to pick new plans for 2017, according to a Credit
Suisse Group AG estimate. In addition, 16 of the 23 health insurance gco-opsh --
federally financed, not-for-profit insurance startups -- have gone out of
business, including four this year, further reducing consumersf choices. Six of
the seven remaining are facing financial difficulties.
More States
In South Carolina, the ACA hasnft worked for insurance companies or
consumers, said Ray Farmer, the statefs insurance regulator.
gWe have fairly narrow networks at high costs, and companies cannot seem to
make a profit,h he said. gIfm not so sure this is what the federal government
contemplated with their program.h
Up the coast in North Carolina, Insurance Commissioner Wayne Goodwin said the
news of Aetnafs withdraw caught him by surprise, and that he learned of it while
reviewing Aetnafs proposed rates for next year.
gI am shocked and disappointed that Aetna and its executives have chosen
to
abandon their exchange members,h he said in an e-mailed statement. gNever
during the review did the company indicate any concernh that couldnft be
resolved.
Aetna declined to comment on Goodwinfs remarks.
Other Options?
BlueCross BlueShield of North Carolina, a not-for-profit, hasnft said whether
it will remain in every county for 2017, where itfs the only option in some
places. The insurer says itfs evaluating the effects of Aetnafs exit --
UnitedHealth earlier quit North Carolina as well -- and what rates regulators
will let it charge.
gWe have not made a final decision of our continued participation until the
answers to these questions are known,h the insurer said in a statement.
Itfs also not clear yet what, if anything, the U.S. government can do in
places where the are no insurers selling coverage on the exchanges, but the
health law requires people to buy it or pay a fine.
The U.S. Department of Health & Human Services is working with Arizona
regulators to ensure that everyone in the state has access to health coverage,
according to Ben Wakana, an HHS spokesman.
Stephen Briggs, a spokesman for the Arizona regulators, says the state canft
force insurers to offer coverage on the exchange. gWefre doing everything within
the law, within our authority,h he said.
Nor can they stop them from leaving, said Joe Antos, a health economist at
the American Enterprise Institute, a conservative-leaning think tank in
Washington.
"Unless there is a change in the law, conditions arenft going to change,h
Antos said. The insurers are gbasically saying, eIf this is the way itfs got to
be, we have to leave.f"