After years of losses, the U.S. health insurance industry figured out how make money from Obamacare last year, a new analysis shows.
The secret? Raising their prices.
The average cost of health insurance plans sold in the individual market climbed about 22 percent in 2017, as insurers boosted premiums well above what they spent on medical care. That left many in a profitable position for the first time since the Affordable Care Act went into effect, according to a Kaiser Family Foundation report released Thursday.
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The first glimpse of what health-insurance companies plan to charge for Obamacare plans next year suggests there’s no relief ahead for consumers saddled with high premiums.
Several insurers in Maryland and Virginia are seeking double-digit percentage increases in monthly costs for individual medical plans in 2019. The largest increases are being sought by CareFirst, which wants to nearly double the amount it charges on average for one coverage option in Maryland, and raise the cost of another in Virginia by 64 percent.
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In tiny Marion, North Carolina, the Buchanans decided that $1,800 a month was too much to pay for health insurance, and are going without it for the first time in their lives.
In Harahan, one bend of the Mississippi River up from New Orleans, the Owenses looked at their doubling insurance premiums and decided no, as well. “We’re not poor people but we can’t afford health insurance,” Mimi Owens said.
And in a Phoenix suburb, the Bobbies and their son Joey will go uninsured so the family can save money to cover their nine-year-old daughter Sophia, who was born with five heart defects.
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On March 5, the Trump administration’s top health official told a conference of hospital executives to hurry up. Washington has spent more than a decade slowly nudging the medical industry away from treating health care as a volume commodity business, where more care is better, and toward incentives that reward improving patients’ health. In all that time, almost nothing has changed. “That transition needs to accelerate dramatically,” said Alex Azar, a former Eli Lilly and Co. executive who was confirmed as secretary of Health and Human Services in January.
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Aetna Inc. is quitting Virginia’s Obamacare market for 2018, the second state that Chief Executive Officer Mark Bertolini is exiting as he seeks to limit his insurer’s risks from the beleaguered health law.
“We will not offer on- or off-exchange individual plans in Virginia,” Aetna said in an emailed statement, citing $200 million or more in losses the company anticipates this year on individual products. The insurer also cited “growing uncertainty in the marketplace” for the plans.
UnitedHealth Group Inc., which has largely stopped selling ACA health plans, said last month it was pulling out of Virginia. Also in April, Aetna said it wouldn’t sell Obamacare plans on Iowa’s market next year.
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Uninsured rates in low-income families have fallen under the Affordable Care Act, yet more than a third of Americans continued to face difficulties paying their medical bills in 2016, a survey found.
Adults in poor families were among the greatest beneficiaries of the ACA, with uninsured rates falling as much as 17 percentage points since it became law in 2010, according to a study from the Commonwealth Fund.
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Rep. Tom Price (R-GA), President Donald Trump’s pick to lead the Department of Health & Human Services, on Tuesday gave the clearest clues yet about how the administration might repeal and replace Obamacare. In a confirmation hearing before the Senate Finance Committee, Price laid out broad goals such as affordability and a focus on patients. Price wouldn’t say whether a new measure would cover as many people as the Affordable Care Act or what kind of coverage would be available for individuals to buy. Price repeatedly said that he wants a health-care system in which “every single American has access to affordable health coverage that will provide the highest-quality health care that the world can provide.”
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U.S. health insurers signaled Tuesday that they’re willing to give up a cornerstone provision of Obamacare that requires all Americans to have insurance, replacing it with a different set of incentives less loathed by Republicans who have promised to repeal the law.
Known as the “individual mandate,” the rule was a major priority for the insurance industry when the Affordable Care Act was legislated, and also became a focal point of opposition for Republicans. In a position paper released Tuesday — the first since President-elect Donald Trump’s victory — health insurers laid out changes they’d be willing to accept.
“Replacing the individual mandate with strong, effective incentives, such as late enrollment penalties and waiting periods, can help expand coverage and lower costs for everyone,” AHIP said.
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Oscar Insurance Corp., the Silicon Valley-backed health-care startup, continued to lose tens of millions of dollars in the third quarter as the company exits some markets and works to diversify away from of its Obamacare business.
The New York-based company sells health insurance to individuals in new markets set up by the Affordable Care Act. Its attempt to reinvent the insurance business has been marked by large losses — in the third quarter, closely held Oscar lost $45 million in New York, Texas and California, according to filings with regulators. That follows losses of $83 million in those states during the first six months of this year.
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Anthem Inc. said it may join other major U.S. health insurers in largely pulling out of Obamacare’s markets in 2018 if its financial results under the program don’t improve next year.
Anthem retreating from the Affordable Care Act would mean that almost all of the major American for-profit health insurers have substantially pulled back from the law. The other big insurers — UnitedHealth Group Inc., Aetna Inc. and Humana Inc. — have already scaled back, after posting massive losses. The retreats threaten to further destabilize coverage in the markets for individual coverage, known as exchanges, that provide insurance to millions of Americans.
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