Published on Alternet (http://www.alternet.org)
Home > Will Health Insurance Companies Succeed Where the GOP Couldn't-in
Killing Obamacare?
________________________________________
Will Health Insurance Companies Succeed Where the GOP Couldn't-in Killing
Obamacare?
By Angelo Young [1] / Salon [2]
August 4, 2016
Congressional Republicans have tried in vain over the years to repeal or
overturn all or part of the Affordable Care Act - President Barack Obama's
keystone legislation that has given more than 20 million Americans health
insurance coverage in the world's costliest health care market [3] - since
it was signed into law in 2010. But where GOP has failed time and again,
private insurers may be succeeding.
In the past two days, Aetna and Humana, two of the country's five largest
health insurers (they're currently involved in merger negotiations), have
announced they're pulling out of Obamacare's public insurance exchanges - a
key component of the legislation aimed at reeling in costs to Americans not
covered by employer policies or otherwise unable to afford premiums and
other expenses.
Humana, the country's fifth-largest insurer by revenue, said [4] Wednesday
in its quarterly earnings report that next year it will cover "no more than
156 counties, down from its 2016 presence in 1,351 counties." It's pulling
out completely from fourof the 15 states [5] in which it's currently
participating. (A call to a Humana spokesman asking to clarify which
counties were spared and what criteria was used to selected them was not
returned.)
Only a day earlier, Aetna, the country's No. 3 insurer, announced it was
re-evaluating its involvement in exchanges in 15 states and dropping
previously reported plans to expand its coverage via exchanges. "We believe
it is only prudent to reassess our level of participation on the public
exchanges," Mark Bertolini, Aetna chairman and CEO, said in a conference
call with analysts on Thursday. "Our initial action will be to withdraw our
2017 public exchange expansion plans."
They both follow the path set by UnitedHealth, the nation's top health
insurance provider, which announced [6] in April that it would be exiting
most Obamacare exchanges in 2017. Other major insurers have made similar
announcements, citing customer bases that are too sick and too costly to
insure.
A Blue Cross Blue Shield report [7] earlier this year said enrollees in the
company's individual exchange plans, "have higher rates of certain diseases
such as hypertension, diabetes, depression, coronary artery disease, human
immunodeficiency virus (HIV) and Hepatitis C." And yet this was all
expected, Obamacare proponents point out, since a disproportionate number of
exchange enrollees would have been denied coverage for pre-existing
conditions pre-Obamacare.
The problem, both insurers and Obamacare boosters agree, is that fewer than
expected healthier customers (i.e. those with a lower cost of care) have
enrolled in the individual exchanges, which means their ranks consist
largely of lower-income self-employed workers and those hovering near the
line that qualifies them for Medicaid.
Part of the issue is that these exchanges are still new and the majority of
insurers have yet to figure out how to make them profitable. The most
successful companies operating in these exchanges, such as Molina Healthcare
and Centene [8], are those that been handling Medicaid managed-care plans
and who have experience with the state and federal program that covers the
poorest among us.
"If you look at the insurers that are expanding on the exchange and those
that are not, they tend to serve very different markets," Mireille Jacobson,
director of the Center for Health Care Management and Policy at the
University of California, Irvine, told Salon via email. "My impression is
that the insurers that are more familiar with lower income consumers are the
ones expanding, e.g., Molina in my neck of the woods. They have more
experience with these customers and have established provider networks to
serve them."
The exodus of major insurers from Obamacare business could result in several
outcomes. One is allowing more people to qualify for Medicaid subsidies and
raising rates - putting the ACA's gains and long-term prospects at risk. Or
perhaps there will be an influx of younger, healthier Americans opting in to
the exchanges and bringing costs down. Or the government could intervene and
impose health care price controls and/or a single-payer system. Those last
two options are unlikely to happen anytime soon given the political climate
in the country and the fact that the GOP seems assured of retaining control
of the house, if not the Senate, this November. So it appears these fleeing
insurers are making once dubious claims that the ACA will lead to higher
health care costs look prophetic.
The reasons health insurance companies cite for pulling out of the Obamacare
deserve a little scrutiny. Insurers have pointed to the money they've lost
by participating in the exchanges. It's worth noting, however, that these
companies have earned billions of dollars in profits, and the Obamacare
mandate - which penalizes those who don't buy insurance - has given them a
much larger customer base and contributed to those handsome profits.
Take Aetna as an example: Since the 2012 ruling in which the U.S. Supreme
Court upheld Obamacare's constitutionality, Aetna's profits have grown 32
percent, its revenue has doubled to more than $60 billion and its stock has
gained nearly 180 percent. Humana's stock price has grown by nearly 120
percent over the same period. UnitedHealth's shares have grown 142 percent.
The hard truth about Obamacare (and about health care around the world) is
this: nobody makes money extending health coverage to large numbers of poor
customers - even the success stories are working with customers who receive
government subsidies. Even so, it's clear the ACA isn't killing the health
insurance giants - too bad they don't seem inclined to return the favor.
Angelo Young is a general assignment reporter for the International Business
Times.
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Report typos and corrections to 'corrections@xxxxxxxxxxxx'. [9]
[10]
________________________________________
Source URL:
http://www.alternet.org/economy/will-insurance-companies-kill-obamacare
Links:
[1] http://www.alternet.org/authors/angelo-young
[2] http://www.salon.com
[3]
http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirror-mi
rror
[4]
https://www.sec.gov/Archives/edgar/data/49071/000004907116000169/hum-2016063
0x10q.htm
[5]
http://press.humana.com/press-release/humana-details-2015-individual-public-
exchange-offerings
[6]
http://money.cnn.com/2016/04/19/investing/unitedhealthcare-obamacare-exchang
es-aca/
[7]
http://www.bcbs.com/healthofamerica/newly_enrolled_individuals_after_aca.pdf
[8]
http://www.telegram.com/news/20160504/change-is-in-works-for-humana-aca-exch
ange-participation
[9] mailto:corrections@xxxxxxxxxxxx?Subject=Typo on Will Health Insurance
Companies Succeed Where the GOP Couldn't-in Killing Obamacare?
[10] http://www.alternet.org/
[11] http://www.alternet.org/%2Bnew_src%2B
Published on Alternet (http://www.alternet.org)
Home > Will Health Insurance Companies Succeed Where the GOP Couldn't-in
Killing Obamacare?
Will Health Insurance Companies Succeed Where the GOP Couldn't-in Killing
Obamacare?
By Angelo Young [1] / Salon [2]
August 4, 2016
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Congressional Republicans have tried in vain over the years to repeal or
overturn all or part of the Affordable Care Act - President Barack Obama's
keystone legislation that has given more than 20 million Americans health
insurance coverage in the world's costliest health care market [3] - since
it was signed into law in 2010. But where GOP has failed time and again,
private insurers may be succeeding.
In the past two days, Aetna and Humana, two of the country's five largest
health insurers (they're currently involved in merger negotiations), have
announced they're pulling out of Obamacare's public insurance exchanges - a
key component of the legislation aimed at reeling in costs to Americans not
covered by employer policies or otherwise unable to afford premiums and
other expenses.
Humana, the country's fifth-largest insurer by revenue, said [4] Wednesday
in its quarterly earnings report that next year it will cover "no more than
156 counties, down from its 2016 presence in 1,351 counties." It's pulling
out completely from fourof the 15 states [5] in which it's currently
participating. (A call to a Humana spokesman asking to clarify which
counties were spared and what criteria was used to selected them was not
returned.)
Only a day earlier, Aetna, the country's No. 3 insurer, announced it was
re-evaluating its involvement in exchanges in 15 states and dropping
previously reported plans to expand its coverage via exchanges. "We believe
it is only prudent to reassess our level of participation on the public
exchanges," Mark Bertolini, Aetna chairman and CEO, said in a conference
call with analysts on Thursday. "Our initial action will be to withdraw our
2017 public exchange expansion plans."
They both follow the path set by UnitedHealth, the nation's top health
insurance provider, which announced [6] in April that it would be exiting
most Obamacare exchanges in 2017. Other major insurers have made similar
announcements, citing customer bases that are too sick and too costly to
insure.
A Blue Cross Blue Shield report [7] earlier this year said enrollees in the
company's individual exchange plans, "have higher rates of certain diseases
such as hypertension, diabetes, depression, coronary artery disease, human
immunodeficiency virus (HIV) and Hepatitis C." And yet this was all
expected, Obamacare proponents point out, since a disproportionate number of
exchange enrollees would have been denied coverage for pre-existing
conditions pre-Obamacare.
The problem, both insurers and Obamacare boosters agree, is that fewer than
expected healthier customers (i.e. those with a lower cost of care) have
enrolled in the individual exchanges, which means their ranks consist
largely of lower-income self-employed workers and those hovering near the
line that qualifies them for Medicaid.
Part of the issue is that these exchanges are still new and the majority of
insurers have yet to figure out how to make them profitable. The most
successful companies operating in these exchanges, such as Molina Healthcare
and Centene [8], are those that been handling Medicaid managed-care plans
and who have experience with the state and federal program that covers the
poorest among us.
"If you look at the insurers that are expanding on the exchange and those
that are not, they tend to serve very different markets," Mireille Jacobson,
director of the Center for Health Care Management and Policy at the
University of California, Irvine, told Salon via email. "My impression is
that the insurers that are more familiar with lower income consumers are the
ones expanding, e.g., Molina in my neck of the woods. They have more
experience with these customers and have established provider networks to
serve them."
The exodus of major insurers from Obamacare business could result in several
outcomes. One is allowing more people to qualify for Medicaid subsidies and
raising rates - putting the ACA's gains and long-term prospects at risk. Or
perhaps there will be an influx of younger, healthier Americans opting in to
the exchanges and bringing costs down. Or the government could intervene and
impose health care price controls and/or a single-payer system. Those last
two options are unlikely to happen anytime soon given the political climate
in the country and the fact that the GOP seems assured of retaining control
of the house, if not the Senate, this November. So it appears these fleeing
insurers are making once dubious claims that the ACA will lead to higher
health care costs look prophetic.
The reasons health insurance companies cite for pulling out of the Obamacare
deserve a little scrutiny. Insurers have pointed to the money they've lost
by participating in the exchanges. It's worth noting, however, that these
companies have earned billions of dollars in profits, and the Obamacare
mandate - which penalizes those who don't buy insurance - has given them a
much larger customer base and contributed to those handsome profits.
Take Aetna as an example: Since the 2012 ruling in which the U.S. Supreme
Court upheld Obamacare's constitutionality, Aetna's profits have grown 32
percent, its revenue has doubled to more than $60 billion and its stock has
gained nearly 180 percent. Humana's stock price has grown by nearly 120
percent over the same period. UnitedHealth's shares have grown 142 percent.
The hard truth about Obamacare (and about health care around the world) is
this: nobody makes money extending health coverage to large numbers of poor
customers - even the success stories are working with customers who receive
government subsidies. Even so, it's clear the ACA isn't killing the health
insurance giants - too bad they don't seem inclined to return the favor.
Angelo Young is a general assignment reporter for the International Business
Times.
Error! Hyperlink reference not valid.
Error! Hyperlink reference not valid.
Report typos and corrections to 'corrections@xxxxxxxxxxxx'. [9]
Error! Hyperlink reference not valid.[10]
Source URL:
http://www.alternet.org/economy/will-insurance-companies-kill-obamacare ;
Links:
[1] http://www.alternet.org/authors/angelo-young
[2] http://www.salon.com
[3]
http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirror-mi
rror
[4]
https://www.sec.gov/Archives/edgar/data/49071/000004907116000169/hum-2016063
0x10q.htm
[5]
http://press.humana.com/press-release/humana-details-2015-individual-public-
exchange-offerings
[6]
http://money.cnn.com/2016/04/19/investing/unitedhealthcare-obamacare-exchang
es-aca/
[7]
http://www.bcbs.com/healthofamerica/newly_enrolled_individuals_after_aca.pdf
[8]
http://www.telegram.com/news/20160504/change-is-in-works-for-humana-aca-exch
ange-participation
[9] mailto:corrections@xxxxxxxxxxxx?Subject=Typo on Will Health Insurance
Companies Succeed Where the GOP Couldn't-in Killing Obamacare?
[10] http://www.alternet.org/
[11] http://www.alternet.org/%2Bnew_src%2B