Medically Approved

The state of the health care marketplace

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Optum Perks Author

By Optum Perks Author

Aetna’s recent announcement that it is pulling out of most of its health care markets is the latest and largest setback to the two-year old Affordable Care Act (ACA), more commonly referred to as Obamacare. Similar threats by other major health insurance providers, rising rates, talks of further consolidations, and push-back by consumers, doctors and insurers are leaving all parties scratching their heads about the state of the healthcare marketplace.

Meanwhile, there also seems to be a tug of war of sorts between the federal government and the larger insurers, including Aetna, about their merger proposals. The Justice Department is blocking the mergers, which it feared would “limit price competition, reducing benefits, decreasing incentives to provide innovative wellness programs and lowering the quality of care.”

With Aetna’s departure from all but four healthcare exchanges, those fears may be realized. Primarily, fewer plans and options for consumers.

Aetna cites financial losses for its decision, although the move also smacks of retaliation, according to the Obama administration. Regardless, Aetna consumers are caught in the crossfire, scrambling to find different coverage for 2017.

Those covered by other plans must wonder if they’re next. Not to mention the perceived domino effect on rates, already rising by double digits in some markets as insurers fight to remain profitable in an environment in which price is the key concern for consumers.

The fallout from the ACA also raises concerns about the future in a post-Obama administration for a major national reform effort to insure the previously uninsurable.

The Kaiser Family Foundation’s early analysis of premium changes in nearly a dozen major city markets delivered a mixed bag: “Costs for the lowest and second-lowest cost silver plans – where the bulk of enrollees tend to migrate – are changing relatively modestly in 2016, although increases are generally bigger than in 2015.”

From all indications, 2017 promises to bring more double digit rate hikes to cover higher than expected medical costs. Rising rates are primarily caused by an imbalance: not enough younger, healthier consumers needed to offset the higher health bills associated with older, sicker ones.  While the latter are forking over higher monthly premiums for better coverage for their previously untreated chronic conditions – a primary goal of the health-care plan – the younger set are either accepting tax penalties for being uninsured or hedging their bets with lower-cost plans that have limited networks.

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Benefits advisers interviewed for this story say the ACA still doesn’t live up to the first word in its name: affordable. More needs to be done to provide care for a “vast underserved market” whose incomes don’t qualify them for Medicaid or federal subsidies that make the healthcare exchanges affordable, said Michael Wardrip, a South Carolina benefits consultant and former director of government affairs for the Georgia Association of Health Underwriters.

Obama, those who support or have benefited from the plan say the marketplace has “made significant progress” in healthcare reform and providing access to otherwise uninsurable high-risk consumers.

In a report published recently in the Journal of the American Medical Association, Obama urged policymakers to increase federal assistance for marketplace enrollees, including a “public plan” in areas lacking market competition.

“Both insurers and policy makers are still learning about the dynamics of an insurance market that includes all people regardless of any preexisting conditions, and further adjustments and recalibrations will likely be needed as can be seen in some insurers’ proposed Marketplace premiums for 2017,” Obama said in the report, United States Health Care Reform Progress to Date and Next Steps.

Still in its infancy, the ACA no doubt has experienced growing pains. From technological issues with the site during early enrollment to the latest shakeup in the marketplace, the stability of the health care plan remains to be seen, say sources consulted for this story.

The responsibility for healing the wounds left by the Aetna departure and the ACA challenges the exit spotlighted seems to fall on insurers and policymakers. They are tasked with considering how to attract the right mix of high and low risk consumers. Meanwhile, the onus is also on consumers to be more vigilant in researching their options in a changing marketplace, Wardrip said.

“Consumers have to be engaged across the board in order to survive the power of economic changes. They have got to protect their pocketbook; they have to protect themselves as well.”

Tags: Aetna, Healthcare Marketplace, Affordable Care Act, ACA, Obamacare, Healthcare Reform, Healthcare Exchanges, Obama, Justice Department.