Insurance Hardball
Despite all the effort and commotion in Washington, D.C. over the last few months, the Affordable Care Act (ACA) – or “Obamacare” – is still in place. This is not to say, however, that coverage under the ACA will remain the same going forward. In the absence of necessary reform and amidst general uncertainty regarding legislation and budgeting, states and insurers are playing hardball with health insurance. What does that mean for the rest of us? Today, we’ll review some of these recent developments in the ACA marketplace to better prepare for what may lie ahead.
You may have seen headlines here and there: “Major Obamacare insurer pulls out of Ohio,” “From Anthem to Aetna, major health insurers are leaving ObamaCare,” “These 5 places will be hardest hit by those leaving the ACA,” and so on. The reason these companies are leaving state ACA marketplaces is simple. They aren’t making as much money on their investments as they could be elsewhere, and in some cases they aren’t making money at all. One such case can be seen in Alabama, where Blue Cross Blue Shield is spending $1.20 for every $1.00 it collects in premiums. Obviously, this is an unsustainable model. Yet the threats to insurers’ bottom lines continue: cost-sharing reductions (CSRs), a type of federal reimbursement that effectively allows insurance providers to reduce medical expenses for people with lower incomes, are on thin legal ice that the recent presidential administration could break at any time. If funds for CSRs disappear, providers will have even less incentive to insure those with lower incomes. Even providers that profit in the ACA marketplace under the current system would stand to lose a great deal of money due to the importance of CSRs. Faced with this potential scenario, many companies are raising their premiums while others are packing up and abandoning the ACA marketplace in favor of more profitable ventures.
In New York, Governor Andrew Cuomo has made his stance on this type of behavior very clear. In June, he announced that any providers that withdraw from the ACA marketplace will be banned from all other state health programs, such as Child Health Plus and Medicaid. In making this announcement, Governor Cuomo signaled that he was willing to play hardball with insurance providers by speaking their language – money. Banning providers from all programs if they withdraw from one may seem more like a petty swipe than a calculated strategy, but it is important to understand that those other state health programs are generally very profitable for the companies involved. So profitable, in fact, that companies complaining about ACA unsustainability often turn around and beg to service Medicaid in the same breath. By threatening their access to the massive profit to be had in serving New York residents, Governor Cuomo was able to effectively rein in any providers considering leaving the ACA marketplace. In his announcement, he asserted that “the people of New York will not have to worry about losing access to the quality medical care they need and deserve,” and he was correct. Compared to other states, the New York ACA exchange has been more stable and seen fewer insurer dropouts. Note, of course, that he made no such promise about preventing premiums from increasing. Such is the nature of insurance hardball.
So what should we expect going forward? Unfortunately, there are likely to be hefty premium increases across the board in our future. While the ultimate fate of CSRs remains in question, the legal case has been put on hold, effectively maintaining the status quo until the end of the year. Until a reasonable and fiscally sound alternative to the ACA is proposed and passed, uncertainty among providers could leave more counties “bare” (without any insurance plans available on the ACA marketplace) as they withdraw in increasing numbers. For this reason, it is important that you look over your health insurance plan and ensure that you are adequately covered, or begin looking into alternatives immediately if you are in an affected area. Below, you can see a list of companies that are known to be withdrawing or are publicly considering withdrawing from the ACA marketplace in some capacity. As we are currently in the season where providers are announcing whether they plan to participate in the ACA exchange, this list may not be complete or fully up-to-date. Speak with a representative from your provider if you are unsure.
Aetna
Anthem
Humana
Medica
Minuteman Health
Molina Healthcare
Harken Health Insurance
Wellmark
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