[Marxism] Obamacare contradictions
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
By REED ABELSON
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
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
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
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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