The latest turmoil in health insurance marketplaces created by the Affordable Care Act has emboldened both conservatives who want to shrink the federal role and liberals who want to expand it. UnitedHealth Group announced last week that it may pull out of the marketplaces in 2017 after losing money this year. This followed the collapse of 12 of the 23 nonprofit insurance cooperatives created with federal loans under the health law. In addition, insurance markets in many states are unstable. Premiums are volatile and insurers say their new customers have been sicker than expected.
Michael Cannon of the Cato Institute, Tarren Bragdon of the Foundation for Government Accountability, and Daniel Landon of the Missouri Hospital Association joined former Secretary of the Department of Health & Human Services (HHS) Kathleen Sebelius to discuss Medicaid expansion under the Affordable Care Act.
The sudden collapse of the largest nonprofit insurance cooperative created under the Affordable Care Act is causing headaches in New York, especially for medical providers owed millions of dollars for treating the failed plan’s patients. Hospitals, doctors, and other clinicians are legally obligated to continue treating Health Republic patients through the end of the month but have been given no assurances they will ever be paid for that care.
Executives with Arizona’s nonprofit health insurance co-op said Tuesday that they have failed to come up with additional financial backing and the insurer plans to shut down all operations December 31, 2015. The announcement by Meritus Health Partners means 59,000 Arizonans it now covers need to find a new insurer by December 15 if they want coverage on January 1, 2016.
“Taxpayers should not be forced to throw good money after bad,” Grace-Marie Turner said in an interview with LifeZette. Turner is president of the Galen Institute, a not-for-profit health and tax policy research organization. “Congress would be well advised to exercise its oversight function to ensure no additional federal dollars are wasted on the program, as well as investigate how the taxpayer loans have been spent and who will pay it back,” she said.
UnitedHealth Group just announced they expect to lose $700 million in the Obamacare exchanges and are seriously considering withdrawing from the program in the coming year. Why is this happening? Because nowhere near enough healthy people are signing up to pay for the sick. The Robert Wood Johnson Foundation and the Urban Institute have come to largely the same conclusion—enrolling a total of 10 million in the exchanges, based on historic trends, would mean only about 9 million of them would be subsidy eligible. That would amount to only 38% of the 24 million people eligible for a subsidy.
UnitedHealth expects to lose $425 million on ObamaCare, including $275 million in 2016. The situation is so dire, the company took the unusual step of announcing between quarterly reports both the losses and that it may withdraw from Obamacare entirely after 2016. If United indeed pulls out, it would cause hundreds of thousands more Americans to lose their health plans.
This high incidence of failure teaches us two things. First, it should end the thinking that non-profits are somehow better than for-profits. The second lesson is for Republicans in Congress. While there are major problems with Obamacare that should be addressed, legislators shouldn’t throw away the baby with the bathwater.
When consumer advocates tried to call the obstetrician-gynecologists in the online directory of insurers’ in-network providers on the Maryland state exchange, they found that only about 22% of the 1,493 practitioners were accepting new patients, performed well-patient visits and had appointments available within four weeks. More than a third weren’t available at all because they had left the networks, retired or were dead.
There are 499 markets for Obamacare plans in the United States. In 89 of them, the insurance company that offered this year’s best deal in the “silver” category will not be returning for 2016. The New York Times has created an interactive map showing in what areas of the United States this is the case.