Stung by losses under the federal health law, major insurers are seeking to sharply limit how policies are sold to individuals in ways that consumer advocates say seem to discriminate against the sickest and could hold down future enrollment.
In recent days Anthem, Aetna and Cigna, all among the top five health insurers, told brokers they will stop paying them sales commissions to sign up most customers who qualify for new coverage outside the normal enrollment period, according to the companies and broker documents.
Today the Mercatus Center unveiled a study by Bradley Herring (Johns Hopkins University) and Erin Trish (University of Southern California) finding that the much-discussed health spending slowdown that continued in 2010-13 “can likely be explained by longstanding patterns” over more than two decades, rather than suggesting a recent policy correction. Projecting these factors forward and incorporating the effects of the Affordable Care Act’s health insurance coverage expansion provisions, Herring-Trish predict the expansion will produce a “likely increase in health care spending.”
Though not surprising in light of longstanding appreciation of insurance’s effects on health service utilization, the latter finding is nevertheless profoundly concerning given that pre-ACA health spending growth trends were already widely held to be untenable.
Private health insurers made a Faustian bargain with Democrats in 2010: In return for supporting passage of the Affordable Care Act, the companies would be able to grow their business with subsidized customers who were required to buy insurance. How’s that working out?
Except for Dr. Faustus, not great. Democrats lost control of the House and Senate thanks in considerable part to their votes passing ObamaCare on partisan lines. And now we’re learning that private health insurers are losing money on their Affordable Care Act business, as Aetna was the latest to acknowledge on Monday during its quarterly earnings report.
The head of the third-biggest U.S. health insurer said he has “serious concerns” about whether or not ObamaCare’s new markets are sustainable, echoing criticism from other top for-profit insurers.
“We continue to have serious concerns about the sustainability of the public exchanges,” Aetna Inc. Chief Executive Officer Mark Bertolini said on a call Monday while discussing the company’s fourth-quarter results. “We remain concerned about the overall stability of the risk pool.”
Large U.S. health insurers have faced a rocky start in the Patient Protection and Affordable Care Act, which in 2014 opened up new markets where millions of Americans buy coverage, often with tax subsidies to help them afford it. Aetna is one of the biggest insurers in ObamaCare and, like its rivals UnitedHealth Group Inc. and Anthem Inc., has struggled to make a profit in the business.
Before you try a short-term plan, consider the pros and cons:
PROS
- You can buy them any time of year.
- Their premiums are generally lower than major medical insurance plans. The average premium for short-term plans sold by eHealth in California last year was $177 per month, Purpura says.
- They may have broader networks of doctors and hospitals than some plans available from exchanges.
CONS
- They won’t accept you if you have pre-existing conditions, or if they do, they won’t cover them.
- They may not cover benefits such as maternity care, preventive services or prescription drugs. Some may offer drug or dental discount plans, but those aren’t the same as insurance.
- They last less than a year and you have to reapply at the end of each term. There’s no guarantee you’ll be accepted again, especially if you got seriously ill while you had coverage.
Blue Cross and Blue Shield of NC is expecting to lose more than $400 million on its first two years of Obamacare business. According to this morning’s News and Observer, “The dramatic deterioration in Blue Cross’ ACA business is causing increasing alarm among agents and public health officials.” In response to its bleak experience with the ObamaCare exchange, the company has decided to eliminate sales commissions for agents, terminate advertising of ObamaCare policies, and stop accepting applications on-line through a web link that provides insurance price quotes–all moves calculated to limited ObamaCare enrollment.
Chris Conover of Duke University’s Center for Health Policy & Inequalities Research explains what we can learn from North Carolina’s experience.
Freedom Partners Chamber of Commerce has analyzed all publicly available information for health-insurance premiums from healthcare.gov and state insurance departments. It then calculated the weighted averages for all health-insurance plans available on the Affordable Care Act’s exchanges. The weighted average gives a more accurate view of overall premium increases, because it takes into account each insurance plan’s market share.
Findings reveal that nationally, premiums for individual health plans increased on average between 2015 and 2016 by 14.9%. Consumers in every state except Mississippi faced increased premiums, and in no fewer than 29 states the average increases were in the double digits. For a third of states, the average premiums rose 20% or more.
Anthem Inc., the second-largest U.S. health insurer by membership, said premiums for ObamaCare insurance probably will go up next year.
Anthem is eking out a small profit from selling policies to individuals under the Affordable Care Act. Many of its rivals aren’t, though, which means prices have to go up, the company told investors and analysts on Wednesday.
Other insurers are charging premiums that are “still well below what we think appropriate rates are for a sustainable environment,” Chief Financial Officer Wayne DeVeydt said on a conference call with analysts.
The Affordable Care Act was signed into law nearly six years ago. Since that time, 106 regulations have been finalized to implement the ACA. These regulations will cost businesses and individuals more than $45 billion and will require approximately 165 million hours of paperwork in order to comply.
In addition to these regulations, hundreds of guidance documents regarding the ACA have been published by various federal agencies during this time as well. However, more regulations—and additional costs—are still to come.
UnitedHealth Group Inc. said its projected losses on the Affordable Care Act exchanges for 2016 deepened as enrollment grew despite the company’s efforts to reduce sign-ups.
The biggest U.S. health insurer said it is expecting losses of more than $500 million on its 2016 ACA plans, compared with previous projections that amounted to $400 million to $425 million in losses.
UnitedHealth had taken steps to pull back on its exchange business in anticipation of losses, including reducing marketing and slashing commissions to health-insurance agents.