[Marxism] Obamacare contradictions

Louis Proyect lnp3 at panix.com
Sat Aug 13 06:39:01 MDT 2016

NY Times, August 13 2016
Cost, Not Choice, Is Top Concern of Health Insurance Customers

It is all about the price.

Millions of people buying insurance in the marketplaces created by the 
federal health care law have one feature in mind. It is not finding a 
favorite doctor, or even a trusted company. It is how much — or, more 
precisely, how little — they can pay in premiums each month.

And for many of them, especially those who are healthy, all the prices 
are too high.

The unexpected laser focus on price has contributed to hundreds of 
millions of dollars in losses among the country’s top insurers, as fewer 
healthy people than expected have signed up. And that has created two 
vexing questions: Will the major insurance companies stay in the 
marketplaces? And if they do, will the public have a wide array of plans 
to choose from — a central tenet of the 2010 Affordable Care Act?

“The marketplace has been and continues to be unsustainable,” said 
Joseph R. Swedish, chief executive of Anthem, one of the nation’s 
largest insurers.

Most Americans with health insurance get it through their employers or 
from government programs like Medicare and Medicaid. The marketplaces 
were created under the health care law to give the millions of people 
not covered in those ways a way to buy health plans.

While major insurers continue to make profits over all, they say that 
the economics of the marketplaces do not work for them. Insurers can 
offer marketplace plans at four different coverage tiers, and the 
government subsidizes the premiums for millions of people. The thinking 
was that enough healthy people would buy insurance to balance out the 
costs for the not-so-healthy.

But things are not going exactly as envisioned.

People shopping in the marketplaces are overwhelmingly choosing the 
cheapest plans they can find, according to a federal analysis. In 2014, 
two-thirds of people went for the lowest- or second-lowest-priced plans 
in each of the tiers. In 2015, about half chose the cheapest plans.

The pricing pressure is playing out on multiple fronts. People with 
expensive medical conditions, knowing that they need reliable coverage, 
seem willing to pay a little more for plans offered by the large 
companies. Those plans tend to have a wider choice of doctors and a 
stronger brand name, and the insurers say the people signing up are 
sicker than they expected.

Healthy and young people — who are essential to insurers to offset the 
costs of care for unhealthy people — are regularly turning to whatever 
plan is cheapest, including those from little-known insurers or with the 
smallest networks of hospitals and doctors.

Many other young and healthy people, particularly those not eligible for 
generous subsidies, are shunning plans altogether, finding all of the 
prices too high. That decision puts them at risk of tax penalties. By 
some estimates, about 10 million people are signed up, fewer than half 
of the 21 million expected by now.

All of this has the major insurance companies, as they finish their 
third year of selling individual policies under the law, reevaluating 
their role in the marketplace.

The top insurers have essentially stopped talking about expanding their 
marketplace ambitions. Two companies, UnitedHealth Group and Humana, 
have said they plan to largely exit the marketplaces. Aetna has halted 
plans to enter more states.

Even insurers that insist they are committed, like Anthem, which offers 
for-profit Blue Cross plans in more than a dozen states, are struggling 
to find their way. Mr. Swedish describes the market as “not predictable 
and not reliable.”

If the major insurers keep cutting back, it could lead to a cascade of 
effects for the people who depend on the marketplaces for coverage. 
People could potentially face higher premiums because there are fewer 
insurers competing, and they could have more limited choices of plans 
and doctors.

The apprehension is not lost on regulators and lawmakers. On Thursday, 
the Obama administration said it was exploring ways to protect insurers 
from very expensive medical claims. And recently in The Journal of the 
American Medical Association, President Obama wrote that more financial 
assistance for people may be needed.

So the mainstream insurers are struggling to find a business model for 
the marketplaces that works. If an insurer is successful at being the 
cheapest in a market, it has often found that it priced its plans too 
low to cover its medical costs. Some smaller insurers have already gone 
out of business. But if an insurer prices a plan too high, it might not 
attract enough healthy people to break even.

Companies both large and small now plan to raise prices sharply for 
2017, which could prevent even more people from buying policies.

“The price competition has turned out to be much more cutthroat than 
anyone expected,” said Larry Levitt, an executive with the Kaiser Family 
Foundation, which closely tracks the law.

Still, most experts say there is no immediate danger that the market 
will collapse. Marjorie Connolly, a spokeswoman for the Department of 
Health and Human Services, said in a statement that the Obama 
administration was confident that the marketplaces would “continue to 
thrive for years ahead.”

The department said on Thursday that the people entering the 
marketplaces are becoming more mixed over time, and the marketplaces are 
attracting more young and healthy people over all. The major insurers, 
though, say the healthy people are going to other plans, often the least 
expensive ones offered by their smaller competitors.

Some defenders of the law say it is working as intended, harnessing 
competition to keep premiums as low as possible.

“We have to be realistic,” said Linda J. Blumberg, a health care expert 
at the Urban Institute, noting that some large companies may not be 
nimble enough to succeed. “You can’t lower costs without breaking some 

Not every insurance company is struggling. The exceptions seem to be 
those that offer the most limited choice of doctors and hospitals and 
may pay them the least, including plans offered by companies like Molina 
and Centene, which previously specialized in covering low-income 
Medicaid patients.

The insurers faring the worst sell plans that resemble those 
traditionally offered through employers. The plans give customers much 
greater latitude over where to get care and cover some of the 
high-priced doctors and best-known hospitals. The trouble is that people 
signing up for those plans are less healthy — and more expensive to 
treat — than anticipated.

The companies also say that the provisions of the law aimed at 
stabilizing the market and protecting them from heavy losses are not 
working. Several say that consolidation is the answer. Anthem, for 
example, says the only way it can expand in the marketplaces is by 
merging with Cigna, a deal the Justice Department is trying to block.

Another remedy is to attract a broader range of customers. “We have to 
get a healthier pool of people in the market,” said Kurt Kossen, an 
executive at Health Care Service Corporation, which operates nonprofit 
Blue Cross plans in several states but lost $1.5 billion last year.

The result could be a market essentially left to insurers that offer the 
same narrow networks found in Medicaid plans and some remaining Blue 
Cross plans, said Mr. Levitt, of the Kaiser Family Foundation.

“The market is sustainable but with a different mix of plans,” he said.

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