Don’t look now some insurers are re-entering more robust ACA marketplaces

Things aren’t looking too hot for the ACA exchanges right now.

UnitedHealthcare, Aetna, and Humana are abandoning the exchanges in many markets. Upstart Oscar is jumping ship in New Jersey and Dallas. Sixteen of the nonprofit co-ops that were supposed to be the lite version of the public option have folded.

All of this bad news about the exchanges has fired up the health care commentariat and wonkery.

Here are nine opinions, analyses, and takeaways about the ACA exchanges, what the bad news means, and what might be done about it.

  1. Could have been predicted. Jon Kingsdale and others say it makes sense that UnitedHealthcare and Aetna struggled in the ACA exchange market. After all, they’re geared toward serving large, national employers. The regional insurers and Medicaid managed care organizations are better suited for the ACA exchanges, partly because of their strong ties to regional provider organizations.
  2. There are some bright spots. Sarah Kliff at Vox noted that there are plenty of plans on the ACA exchanges in California, and in Dallas and San Antonio. Kingsdale says New Hampshire started with one insurer and now has five and that while Oscar is pulling out of some exchanges, it is joining others (namely, San Francisco).
  3. We gotta be more like the Swiss. Some are questioning whether ACA’s basic framework of relying on private insurers to expand health insurance coverage will ever work. Princeton’s Uwe Reinhardt points to Germany and Switzerland as examples of where private insurance and universal coverage go hand-in-hand. The difference is much more regulation of the plans and tougher penalties—and enforcement of those penalties—for not buying coverage. “If you don’t obey, and the Swiss find out—which they often do when you get to the hospital—they will go after you and garnish your wages,” Reinhardt told Kliff.
  4. It’s beginning to look a lot like Medicaid. Kliff makes an interesting argument that ACA exchanges and the plans being sold on them are morphing into something resembling Medicaid—that’s not necessarily a bad thing because it means health insurance coverage for people with lower incomes who would have been otherwise priced out of the individual market or excluded because of pre-existing conditions. Tim Mullaney, writing for FiveThirtyEight, points out that Molina and Centene, companies with plenty of experience with Medicaid managed care, are making money on the exchanges.
  5. The glass may not be half full but it is far from empty. Enrollment has lagged far behind projections. At one time, the Congressional Budget Office projected 21 million Americans would be insured through coverage bought on the ACA exchanges in 2016, while the actual number is about 12 million. Still, the law’s defenders say the exchanges, as troubled as they might be, are part of the reason that the percentage of Americans without health insurance is at an all-time low.
  6. Unify the individual insurance market. Although the ACA exchanges grab all the attention, there’s still a large individual insurance market outside the exchanges. Approximately 9 million Americans get their health insurance this way, partly because they aren’t eligible for subsidies and the plans may have better coverage. We have a piece about the off-exchange market in this month’s issue of Managed Care. Henry Aaron of the Brookings Institution argued in an opinion piece in the Washington Post last month that one way to stabilize the ACA would be to group the exchange and off-exchange plans into one big marketplace as is already done in Washington, D.C.
  7. Base subsidies on health status, not income. Adverse selection is bedeviling the ACA exchanges. In a blog post for Forbes, Robert Book says the spiral of adverse selection could be reversed if subsidies were based on health status instead of income. Insurers would, in effect, be paid for accepting less healthy customers. Book says the system would be similar to the risk adjustment system that has stabilized the Medicare Advantage market.
  8. Apply some of the lessons from Part D and Medicare Advantage. The ACA exchanges are new, but the federal government does have experience setting up and stabilizing insurance markets. Experts at Georgetown’s Center on Health Insurance Reforms issued a report last month about ways that rules and regulations for Medicare Part D and Medicare Advantage could be used to shore up the ACA exchanges. They note that Medicare Advantage, which is now going like gangbusters, has had a bumpy ride and benefited from regulatory changes. Among their suggestions are making the risk corridor and reinsurance programs permanent, phasing in network adequacy requirements so more insurers could enter the market, and sustained commitment to outreach and assistance in getting people to buy coverage through the ACA exchanges.
  9. It’s broke and can’t be fixed. The ACA exchanges are supposed to create a market with some government rules of the road. But conservative critics of the law—and there are many—and of the exchanges in particular say those rules are a) coercive and b) stand in the way of well-functioning market. The Hudson Institute’s Jeffrey Anderson posted a piece a few days ago that says the only way Obamacare can be fixed is by doubling down on the unpopular individual mandate (“there’s a reason Obama isn’t aggressively enforcing it,” notes Anderson) and increasing “various taxpayer-funded subsidies to insurance companies.” Neither is politically viable, says Anderson, so if the Democrats want to “fix” Obamacare, in his opinion, they must regain control of both houses of Congress (and, of course, win the White House).