May 03, 2016

Fewer Choices, Less Competition: ACA Exchanges Nearly Three Years Later

Post by Derek Yale

In an op-ed for Morning Consult, Freedom Partners Senior Policy Advisor Nathan Nascimento wrote about how the Affordable Care Act is leading to fewer choices and less competition.

The Affordable Care Act’s Competition Crisis

When President Obama described the Affordable Care Act’s health-insurance exchanges in late 2013, he declared they would create “more choice, more competition, [and] real health-care security” for millions of Americans. This hasn’t panned out. Nearly three years later, choice and competition have declined, a problem that is already set to worsen in 2017.

UnitedHealth Group is the latest proof. On April 19, the company announced that it will abandon the exchanges in all but a “handful” of the 34 states in which it currently operates. This could leave up to 6 percent of the Affordable Care Act’s subscribers scrambling for new plans before year’s end.

It’s easy to see why UnitedHealth Group made this choice. The Affordable Care Act has been little more than a money pit for the company. It lost $475 million on the exchanges last year, a number which is expected to grow to nearly $1 billion when this year’s projected losses are included. The spreading red ink led Mr. Hemsley to state late last year that participating in the law was “a bad decision.”

But the company’s struggles to offer a financially viable product via the Affordable Care Act are no outlier. McKinsey and Company announced in February that health insurance companies lost money in 41 states in 2014. This trend continued in 2015, when many insurers lost hundreds of millions. Aetna, which operates in over a dozen states, lost betweenthree and four percent on the exchanges last year. Blue Cross and Blue Shield of North Carolina lost more than $400 million—and another of its operators in multiple states has lost more than $2 billion. Even companies that are turning a profit, such as Anthem, aren’t making enough to ensure long-term participation in the law.

Click here to read the full op-ed.