Aug 25, 2016

Obamacare is Unraveling

Post by Geoff Holtzman

Arlington, VA – With Obamacare causing major insurers to either withdraw from the ACA’s exchanges or significantly raise rates, the administration yesterday tried to reassure Americans that the law is working as planned. That couldn’t be further from reality.

The fact is that Obamacare is entering the danger zone. Recent news of insurance giant Aetna pulling out of Obamacare exchanges around the country has led even the law’s most vocal supporters to question the program’s viability. Each year, more and more Americans are seeing skyrocketing premiums, fewer exchange options and narrower networks with at least one county currently facing zero exchange options in 2017.

Obamacare supporters have already begun making the case for a public option as a solution to these challenges, essentially doubling down on everything that’s wrong with the law and ignoring the disastrous consequences we’re experiencing today.

Key Points:

  • The future of Obamacare is in doubt. Even the law’s supporters agree it cannot go on as currently constructed.
  • Obamacare has resulted in many harmful (but not unforeseen) consequences on both the health care sector and economy as a whole. These should serve as warnings as lawmakers contemplate solutions.
  • Access remains a challenge. At least one county currently has no Obamacare exchange option for next year and dozens more will only have one option.
  • The law’s market distortions have made it impossible for insurance companies to function, putting quality coverage further out of reach for many Americans.

MEDIA OUTLETS ACROSS THE SPECTRUM QUESTION VIABILITY OF LAW

What They’re Saying: “Bad News For Obamacare”

Fortune: “Here’s More Bad News for Obamacare” (Chris Matthews, “Here’s More Bad News for Obamacare,” Fortune, 8/23/2016)

Business Insider: “Even The Startup Trying To Disrupt Health Insurance Can’t Figure Out Obamacare” (Bob Bryan, “Even the startup trying to disrupt health insurance can’t figure out Obamacare,” Business Insider, 8/23/2016)

NBC News: “Covered by Aetna? What to Do Now That It Bailed Out of Obamacare” (Ben Popken, “Covered by Aetna? What to Do Now That It Bailed Out of Obamacare, NBC News, 8/22/2016)

The New York Times’ Paul Krugman: “Obamacare Hits a Bump” (Paul Krugman, “Obamacare Hits a Bump, The New York Times, 8/19/2016)

Bloomberg: “Choices May Be Limited for Obamacare Shoppers, Avalere Says” (Zachary Tracer, “Choices May Be Limited for Obamacare Shoppers, Avalere Says,” Bloomberg, 8/19/2016)

ABC News: “More Hispanics Uninsured Despite Obamacare Gains, Report Says” (Gillian Mohney, “More Hispanics Uninsured Despite Obamacare Gains, Report Say,” ABC News, 8/18/2016)

Morning Consult: “The Poor, the Young and Latinos Most Likely to Be Uninsured, Analysis Finds” (Mary Ellen McIntire, “The Poor, the Young and Latinos Most Likely to Be Uninsured, Analysis Finds,” Morning Consult, 8/18/2016)

CNBC: “Obamacare Is Unsustainable — The Backbone Could Collapse, Expert Warns” (Abigail Stevenson, “Obamacare Is Unsustainable — The Backbone Could Collapse, Expert Warns,” CNBC, 8/17/2016)

National Journal: Questions Are Being Raised “About The Long-Term Stability Of One Of The Law’s Key Tenets.” (Rachel Roubein, “Obamacare’s Exchanges Are Faltering—But What’s the Cure?” National Journal, 8/25/16)

Sentinel & Enterprise: “The unaffordable Affordable Care Act” (Editorial, “The unaffordable Affordable Care Act” Sentinal & Enterprise, 8/22/2016)

The Tennessean: “Tennessee Insurance Commissioner: Obamacare Exchange ‘Very Near Collapse’” (Holly Fletcher, “Tennessee insurance commissioner: Obamacare exchange ‘very near collapse,’” The Tennesean, 8/23/2016)

Florida Politics: “There’s More News About The Affordable Care Act This Week, And It Ain’t That Good.” (Mitch Perry, “The Affordable Care Act Is Getting Less Affordable,” Florida Politics, 08/18/16)

The Wall Street Journal: “As Obamacare Implodes, Democrats Blame Insurers.” “Democrats claimed for years that ObamaCare is working splendidly, though anybody acquainted with reality could see the entitlement is dysfunctional. Now as the law breaks down in an election year, they’ve decided to blame private insurers for their own failures.” (Editorial, “The Aetna Mugging,” The Wall Street Journal, 08/17/16)

New Hampshire Union Leader: Obamacare “Succumbing To Its Wounds, But Not Before Inflicting Millions Of Americans With Mediocre, Overpriced Health Insurance.” “The fatally flawed health care program is slowly, and inevitably, succumbing to its wounds, but not before inflicting millions of americans with mediocre, overpriced health insurance. The latest setback for the comically named Affordable Care Act was Aetna’s decision to withdraw from Obamacare exchanges in 11 of the 15 states it currently serves. The company expects to lose $300 million on its ACA business this year.” (Editorial, “Sinking Ship: Aetna Bails On ACA,” New Hampshire Union Leader, 08/17/16)

The Fiscal Times: “A Serious Threat To The Future Of The Program… ” “The disclosure Monday that insurance giant Aetna will pull out of the Obamacare market next year in 11 of the 15 states it now serves poses a serious threat to the future of the program and raises anew the need for major reforms.” (Eric Pianin, “With Aetna Pulling Out, Can Anything Save Obamacare?” The Fiscal Times, 08/17/16)

Even Liberal Media Outlets Express Concern Over The Law:

Vox.com’s Sarah Kliff: “I Feel Like We’re Seeing The Start Of A Conversation Of Whether There Is Something Going Very Wrong With The Marketplaces…” “Right now I feel like we’re seeing the start of a conversation of whether there is something going very wrong with the marketplaces — whether we’ll keep seeing withdrawals to the point where the markets don’t function.” (Sarah Kliff and Ezra Klein, “Public option? Status quo? Collapse? What comes next for Obamacare.” Vox.com, 8/18/2016)

  • Kliff: “…I’m Not Sure How Easy It Would Have Been For Them To Stay In The Marketplaces…” “So I’m not sure how easy it would have been for them to stay in the marketplaces, like you say. Because you see similar companies (exhibit A: UnitedHealth) pulling out of the market, because they’re losing millions of dollars. And they’re not involved in any sort of merger negotiations. Right now companies are three years in, they have shareholders, and it becomes harder and harder to justify staying in the market when you’re not making any money.” (Sarah Kliff and Ezra Klein, “Public option? Status quo? Collapse? What comes next for Obamacare.” Vox.com, 8/18/2016)

The New York Times’ Paul Krugman: “Obamacare Hits a Bump” (Paul Krugman, “Obamacare Hits a Bump, The New York Times, 8/19/2016)

OBAMACARE NOT WORKING OUT AS PLANNED

Obamacare Rife With Unintended Consequences:

Obamacare Is Having The Opposite Effect As Intended With Insurers Pulling Out, Leaving Americans With Few If Any Options. “The dropouts also undermine a key promise of the law: multiple insurers would compete for consumers’ 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.” (Zachary Tracer and Tatiana Darie, “Obamacare Turn Few Choices Into None,” Bloomberg, 8/16/2016)

  • “I’m Not So Sure This Is What The Federal Government Contemplated With Their Program.” “In South Carolina, the ACA hasn’t worked for insurance companies or consumers, said Ray Farmer, the state’s insurance regulator. ‘We have fairly narrow networks at high costs, and companies cannot seem to make a profit,’ he said. ‘I’m not so sure this is what the federal government contemplated with their program.’” (Zachary Tracer and Tatiana Darie, “Obamacare Turn Few Choices Into None,” Bloomberg, 8/16/2016)

Obamacare Users, “Sicker And Costlier Than Expected” As Healthier Americans Opt To “Pay The Penalty Rather Than A Premium.” “There’s no doubt Obamacare is suffering a major shakeup three years after the exchanges opened. Those who’ve signed up for coverage are sicker and costlier than expected, while too many healthier Americans are opting to pay a penalty rather than a premium. That’s prompting many insurers to raise their rates by double-digit percentages for 2017 or minimize their presence on the market.” (Tami Luhby, “Will Obamacare Survive As Insurers Pull Out?,” CNN, 8/17/2016)

It’s Hurting Jobs Too:

Fortune: “A Fed Survey Says Obamacare Is Forcing Employers to Cut Jobs” (Tom Huddleston Jr. “A Fed Survey Says Obamacare Is Forcing Employers to Cut Jobs,” Fortune, 8/17/2016)

One In Five Manufacturing And Service Sector Companies In New York, New Jersey, Connecticut Area Are Reducing Number Of Workers Due To Obamacare. “The rising cost of health care stemming from the Affordable Care Act is leading to job cuts at some companies, a new study finds. A survey released this week by the Federal Reserve Bank of New York found that almost one out of five companies polled in the manufacturing and service sectors in the tri-state area said they are reducing the number of workers they employ as a result of the effects the ACA has had on their businesses.” (Tom Huddleston Jr. “A Fed Survey Says Obamacare Is Forcing Employers to Cut Jobs,” Fortune, 8/17/2016)

Reducing Workforces, Cutting Wages And Salaries And Trimming Benefits. “The New York Fed found that 20.9% of manufacturing companies said they are reducing their workforces as a result of the ACA, compared to 4.7% of executives who said they are increasing the number of workers they employ. Only 16.8% of service sector businesses said they are cutting jobs, while less than 1% are growing their workforces. Almost a quarter of manufacturing executives surveyed said they are reducing their workers’ wage and salary compensation due to ACA, while more than 20% are trimming other benefits, including retirement.” (Tom Huddleston Jr. “A Fed Survey Says Obamacare Is Forcing Employers to Cut Jobs,” Fortune, 8/17/2016)

NO-BAMACARE?

As Insurers Pull Out, A Growing Segment Of The Population Has No Options On The Obamacare Exchange:

“Arizona Is Now An Example Of What Happens When The Market Is Unstable, Leaving Residents With Little Choice.” “‘Arizona is now an example of what happens when the market is unstable, leaving residents with little choice,’ Blue Cross Blue Shield of Arizona said in an e-mailed statement. The not-for-profit insurer said it’s re-evaluating its coverage next year because of the Aetna pull-out.” (Zachary Tracer and Tatiana Darie, “Obamacare Turn Few Choices Into None,” Bloomberg, 8/16/2016)

Residents In Pinal County Arizona “Currently [Don’t] Have A Single Health Insurer Offering Coverage Next Year On The Affordable Care Act’s Exchanges…” “Later this year, residents of Pinal County, Arizona, who go shopping for health insurance under Obamacare will face a peculiar dilemma — they’ll have to buy a product that may not exist. The 400,000-population county southeast of Phoenix currently doesn’t have a single health insurer offering coverage next year on the Affordable Care Act’s exchanges, where Americans can shop for the insurance they’re required to have under the law.” (Zachary Tracer and Tatiana Darie, “Obamacare Turn Few Choices Into None,” Bloomberg, 8/16/2016)

  • “Pinal County Is Just One Place Around The Country Where Americans Will Be Left With Few, If Any, Choices For Coverage.” “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.” (Zachary Tracer and Tatiana Darie, “Obamacare Turn Few Choices Into None,” Bloomberg, 8/16/2016)
  • Initially, Arizona Had Eight Insurers To Pick From, But Today “In About Half The State’s Counties, They’re Now Down To One.” “It wasn’t always so in Arizona. When the ACA began offering coverage three years ago, the state’s consumers had eight health insurers to pick from, said Swapna Reddy, a clinical assistant professor at Arizona State University’s School for the Science of Health Care Delivery. In about half the state’s counties, they’re now down to one.” (Zachary Tracer and Tatiana Darie, “Obamacare Turn Few Choices Into None,” Bloomberg, 8/16/2016)

HARDWORKING AMERICANS PAY THE PRICE FOR OBAMACARE’S MARKET DISTORTIONS

Narrower Networks, Few If Any Options On The Exchanges:

“Patients May Also Lose Their Preferred Doctors And Hospitals If They Sign Up For Plans That Don’t Include Those Providers In Their Network Coverage. People In Rural Areas Are Most Affected.” (Nathan Bomey, “Aetna’s Exit Deals Blow To Obamacare, Patients,” USA Today, 08/16/16)

2 Million May Have To Pick A New Plan Due To Insurers Pulling Out. “Those exits by three of the country’s 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 ‘co-ops’ — federally financed, not-for-profit insurance startups — have gone out of business, including four this year, further reducing consumers’ choices. Six of the seven remaining are facing financial difficulties.” (Zachary Tracer and Tatiana Darie, “Obamacare Turn Few Choices Into None,” Bloomberg, 8/16/2016)

Entire States Could Be Left With Just One Option. “It’s 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.” (Zachary Tracer and Tatiana Darie, “Obamacare Turn Few Choices Into None,” Bloomberg, 8/16/2016)

New Study Shows Reduced Insurance Options Under Obamacare. “Increasingly, U.S. consumers may have fewer insurance options under Obamacare. The latest evidence comes in a study from consulting firm Avalere Health, which examined areas, known as rating regions, that insurers use to set premiums and decide where to offer plans to individuals under the Affordable Care Act.” (Zachary Tracer, “Choices May Be Limited for Obamacare Shoppers, Avalere Says,” Bloomberg, 8/19/2016)

  • More Than One-Third Of Insurance “Rating Regions” May Just Have One Insurer On The Exchange. “According to Avalere, 36 percent of the approximately 500 rating regions in the U.S. may have just one health insurer when the 2017 signup season starts on Nov. 1. Another 19 percent could have just two carriers. There was far more competition this year, with about two-thirds of rating areas having three or more health insurers vying for customers’ business, according to Avalere.” (Zachary Tracer, “Choices May Be Limited for Obamacare Shoppers, Avalere Says,” Bloomberg, 8/19/2016)

More Premium Increases Coming:

More Premium Increases Coming. “The natural result is another round of rate shock for 2017. Insurers in 49 states have submitted their premium requests to regulators, and the average ‘enrollment-weighted’ rate increase, which accounts for market share, is in the range of 18% to 23%. The Congressional Budget Office projected 8%.”(Editorial, “ObamaCare Sicker Shock,” The Wall Street Journal, 8/12/2016)

Huge Increase In Individual Rates On Tennessee Exchange. “Tennessee regulators have approved the full amount of the rate increases requested by the three health insurers still offering exchange plans under ObamaCare, pushing up rates by the biggest amount since the program began three years ago.” (Dave Flessner, “State Approves 62 Percent Jump In Individual Health Exchange Rates By BlueCross For Next Year,” Times Free Press, 8/23/2016)

  • BlueCross BlueShield Of Tennessee: 62 Percent. “BlueCross BlueShield of Tennessee, the state’s biggest health insurer, will raise individual rates by 62 percent in 2017, or nearly double the 36 percent rate increase adopted this year by BlueCross. Small group rates in the marketplace exchange will rise by only 6.5 percent, however.” (Dave Flessner, “State Approves 62 Percent Jump In Individual Health Exchange Rates By BlueCross For Next Year,” Times Free Press, 8/23/2016)
  • Cigna: 46.3 Percent, Humana: 44.3 Percent. “Cigna got state approval to raise its individual rates for its ObamaCare plans by 46.3 percent, while Humana got the OK for a 44.3 percent jump in premiums for individual plans next year.” (Dave Flessner, “State Approves 62 Percent Jump In Individual Health Exchange Rates By BlueCross For Next Year,” Times Free Press, 8/23/2016)

“Sticker Shock” In Pennsylvania. “If you rely on health insurance provided by companies aligned with the Affordable Care Act marketplace in Pennsylvania, prepare yourself for sticker shock when it’s time to pay those premiums in the fall.” (Rick Dandes, “GHP Seeks 41 Percent Rate Hike,” The Daily Item, 8/22/2016)

  • “All Are Proposing Significant Rate Increases For Monthly Premiums In 2017.” “Valley residents enrolled in the ACA marketplace can choose from programs offered by Capital Advantage, Geisinger, Highmark, UPMC Health Options, Geisinger Health Plan, Geisinger Quality Options, and Keystone Health Plan Central. All are proposing significant rate increases for monthly premiums in 2017.” (Rick Dandes, “GHP Seeks 41 Percent Rate Hike,” The Daily Item, 8/22/2016)
  • Forty Percent Premium Increases. “For example, if you’re signed up with Geisinger Health Plan, premiums could increase by 41.23 percent — if approved by the state insurance department. Highmark is asking for a 48.1 percent increase. Keystone Central for a 20.4 percent hike. A final decision on those requests will be announced by the insurance department in October, said Ali Fogarty, deputy press secretary for the Pennsylvania Insurance Department.” (Rick Dandes, “GHP Seeks 41 Percent Rate Hike,” The Daily Item, 8/22/2016)

“Illinois Insurers Seek Premium Increases Of Up To 45%” (“Illinois insurers seek premium increases of up to 45%,” The Associated Press, 8/1/2016)

  • Increases Ranging From 21 Percent To 45 Percent. “The leading insurer on Illinois’ exchange, Blue Cross Blue Shield, is proposing increases for 2017 ranging from 23 percent to 45 percent for individual health care plans, according to proposals posted by Healthcare.gov. Another insurer, Coventry Health Care of Illinois, proposed rate increases as high as 21 percent.” (“Illinois insurers seek premium increases of up to 45%,” The Associated Press, 8/1/2016)

INSURANCE COMPANIES UNABLE TO FUNCTION IN OBAMACARE’S DISTORTED MARKETS

Obamacare Leading To Massive Losses For Insurers:

“If Three Of The Nation’s Largest Insurers Can’t Make It On The Obamacare Exchanges, Can Anyone?” (Tami Luhby, “Will Obamacare Survive As Insurers Pull Out?,” CNN, 8/17/2016)

“…A String Of Announcements That Large Insurers Are Losing Money Selling Their Plans In The Marketplaces…” “Aetna’s exit comes amid a string of announcements that large insurers are losing money selling their plans in the marketplaces, raising doubts about the stability and future of the business.” (Carolyn Y. Johnson. “Aetna Will Leave Most Obamacare Exchanges, Projecting Losses,” The Washington Post, 08/16/16)

“If It Isn’t Addressed, You Will Have More Companies Drop Out And You’ll Have More Pressure On The Other Companies In Terms Of Their Potential Losses.” “‘The idea was that people who use the exchanges would have a variety of plans by different carriers,’ said Robert Blendon, a health-policy professor at Harvard University’s T.H. Chan School of Public Health. ‘If it isn’t addressed, you will have more companies drop out and you’ll have more pressure on the other companies in terms of their potential losses.’” (Zachary Tracer and Tatiana Darie, “Obamacare Turn Few Choices Into None,” Bloomberg, 8/16/2016)

Many Insurers Initially Offered Premiums That Were Too Low And Unsustainable. “‘Many insurers offered premiums that were too low from the beginning, and they weren’t sustainable,’ [Cynthia Cox of the Kaiser Family Foundation] said in an interview. ‘Unfortunately, we might be living through the one-time correction, but hopefully it’s not all doom and gloom.’ 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.” (Zachary Tracer and Tatiana Darie, “Obamacare Turn Few Choices Into None,” Bloomberg, 8/16/2016)

Aetna The Latest Insurer To Scale Back Obamacare Offerings:

“Aetna, The Nation’s Third Largest Health Insurer, Announced Monday Night The Most Significant Departure Yet From The Marketplaces Set Up By President Obama’s Signature Health Care Law.” (Carolyn Y. Johnson. “Aetna Will Leave Most Obamacare Exchanges, Projecting Losses,” The Washington Post, 08/16/16)

Faced With $300 Million In Projected Losses, Aetna Pulling Out of 11 Of 15 States Where It Sells Obamacare Plans. “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.” (Zachary Tracer and Tatiana Darie, “Obamacare Turn Few Choices Into None,” Bloomberg, 8/16/2016)

“Aetna (AET) Is Pulling Out Of 11 Of The 15 States Where It Offers Obamacare Policies After Losing $430 Million, The Company Announced Monday.” (Tami Luhby, “Will Obamacare Survive As Insurers Pull Out?,” CNN, 8/17/2016)

  • “…Arizona, Florida, Georgia, Illinois, Kentucky, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina and Texas.” “The insurer is ending its Obamacare plans in 11 states: Arizona, Florida, Georgia, Illinois, Kentucky, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina and Texas. Participants will be forced to sign up for other Obamacare plans or purchase individual insurance outside of the exchanges once open enrollment begins later this year.” (Nathan Bomey, “Aetna’s Exit Deals Blow To Obamacare, Patients,” USA Today, 08/16/16)
  • “Aetna Will Only Sell Obamacare Products In Delaware, Iowa, Nebraska And Virginia.” (Tami Luhby, “Aetna To Pull Out Of Most Obamacare Exchanges,” CNN Money, 08/16/16)