On Tuesday UnitedHealth Group reported a terrific first quarter, with strong performance across nearly all business lines. There was one exception: The conglomerate’s insurance exchange unit raised its projected Affordable Care Act losses for 2016 to $650 million from $525 million, after booking $475 million in red ink last year.
CEO Stephen Hemsley said ObamaCare’s instability, small market size and costly patient population “continue to suggest we cannot broadly serve it on an effective and sustained basis.” He said UnitedHealth will withdraw to “only a handful of states” in 2017.
Normally sedate insurance markets have been roiled by everything from the federally chartered co-op failures to enrollment well below projections. ObamaCare’s architecture also makes it economically rational for consumers to wait until they are about to incur major medical expenses to get covered, and administratively created “special enrollment periods” encourage such gaming.
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The Republican Study Committee submitted their recommendations for health reform to the House Republican Health Care Reform Task Force on Friday, pointing to several provisions of an already-introduced bill to guide its proposals.
“The Republican Study Committee has led the way on a comprehensive repeal and replace strategy for ObamaCare,” the group says of its recommendations. “Currently, the American Health Care Reform Act, H.R. 2653, is the most cosponsored ObamaCare alternative in the House. This bill relies on conservative principles and increased state flexibility to transform our top-down health care system into one that creates competition, growth and increased access for all Americans.”
United Healthcare’s announcement that it is pulling out of most of the exchanges established by the Affordable Care Act is one of many indications of the law’s continuing instability.
There are many other insurance plans in the same boat. Blue Cross Blue Shield plans have dominated the individual and small-group markets in most states for decades. If they were to abandon this market, they would have less ability than United does to grow their business elsewhere. But many of these plans are nonetheless contemplating such a move.
ObamaCare isn’t likely to enter an insurance death spiral; there’s too much federal money propping the whole thing up. But it isn’t on track to become a stable, self-sustaining insurance pool either, because very few middle-class families want to get their insurance through the exchanges. Which means the law is not only unstable financially, it is politically unstable as well.
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The Obama administration has published rules that “will make it impossible to offer HSA-qualified plans in the future” in the ACA exchanges, according to HSA expert Roy Ramthun. That’s because plans offered in the exchanges must comply with HSA and new ACA rules that conflict. This is one more way in which the ACA is limiting options to people getting coverage through the Obamacare exchanges, giving enrollees fewer of the options available to those with private and employer coverage outside the exchanges. Nationwide, nearly 20 million people were enrolled in HSA-qualified plans last year.
Presidential candidate Donald Trump has said he wants to repeal the Affordable Care Act and yet still “take care of everybody.” He has said repeatedly that he is different from other Republicans in this regard, implying that other GOP politicians don’t want Americans to get needed health services. Of course, Trump has never bothered to back up this slander with any evidence (and the media haven’t bothered to ask him for it).
Trump is apparently unaware of the plans to replace Obamacare sponsored by Rep. Tom Price and by Sen. Richard Burr, Sen. Orrin Hatch, and Rep. Fred Upton. These plans would insure as many Americans as are enrolled today under the ACA at a fraction of the cost.