Land of Lincoln Health, an insurance co-op created under ObamaCare, is no longer taking new small-business customers. The health insurer announced in October that it would severely cap enrollment on the exchange, HealthCare.gov, and limited new small-business clients in particular to help the co-op survive long term. More than half of the co-ops nationwide have failed.
A Kaiser Health News analysis of costs in the three-dozen states selling policies through the federal healthcare.gov website found a sharp difference in premium prices between plans that offer out-of-network care and those that do not. The analysis compared the monthly premiums for the least expensive silver-level plans — the category that are the most popular purchases — for a 40-year-old in each county. While the average premium for the least expensive closed network silver plan—principally HMOs—rose from $274 to $299, a 9 percent increase, the average premium for the least expensive PPO or other silver-level open access plan grew from $291 to $339, an 17 percent jump, KHN found. The cost variations hold true for any age.
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.