Obamacare Unincorporated
Will corporate withdrawals sink the Affordable Care Act?
Upon its passage in 2010, critics charged that the Affordable Care Act represented an unprecedented takeover of America’s healthcare industry, and an unfair check on the free market. However, these critics forget that the law was fundamentally a compromise: federal subsidies would flow to healthcare exchanges in which private companies would pitch their products. Rather than creating an American version of something like the British National Health Service, in which all coverage is provided through the government, President Obama hoped to combine existing health insurance companies with new federal insurance premium subsidies to provide universal coverage. After all, as many pointed out, Massachusetts had successfully established an exchange four years before, having some of the highest insurance coverage in the country, while functioning under the same principle. The public-private partnership seemed to be the future of universal healthcare in the United States.
The viability of this compromise has come into question over the past year. Citing nearly $1 billion in losses since 2015, United Healthcare, one of the biggest players in the insurance game, announced that it will withdraw from all but three of the Affordable Care Act’s state exchanges beginning in 2017. The company previously offered exchange plans in 34 states, and was the biggest individual firm in most of these markets. Consumers who own a United plan will now have to shop for a replacement during the next open enrollment phase, which begins in November. They may have limited options. Shortly after United Healthcare’s withdrawal, Aetna, another major insurance company, announced that it would withdraw from 11 of the 15 states it served. The company claimed that it had lost over $340 million since it began offering exchange plans in January 2014.
These withdrawals have cast doubt on the viability of the exchanges. While companies have lost money, consumers have not gained truly affordable care. This problem seems likely to worsen following United Healthcare and Aetna’s departures. A Kaiser Family Foundation estimate earlier this year projected that the average premium for relatively affordable “silver” insurance plans, which currently cost between $225 and $400 per month, will increase by 9% in 2017. Across the board, they warn, premiums will grow much faster in 2017 than in previous years. In some areas, premiums may become unaffordable. For example, Blue Cross Blue Shield is seeking to increase premiums for plans sold on the Alabama insurance exchange by up to 40%. While consumers who would have a difficult time affording the new premiums can apply for tax credits, the credits are based on income and household size, and are unlikely to increase quickly enough to spare people the pain of rising premiums. The Brookings Institute’s Stuart Butler argues that because of factors like this, the exchanges remain largely unsuccessful, writing that “Much of the progress made under the ACA expanding healthcare coverage to the uninsured has been thanks to increased enrollment in Medicaid — not the exchanges — a harbinger of even less progress to come.” A spike in premiums, and decrease in the number of plans available in the first place, is unlikely to improve the situation. The exchanges were the centerpiece of the Affordable Care Act, making it difficult for the health law to meet its goals without their success.
The Affordable Care Act’s troubles are likely to embolden critics of the private sector’s role in American healthcare. Earlier this year, former presidential candidate Bernie Sanders cited the cost of premiums as a justification for his Medicare for All proposal, which would have expanded the popular insurance plan for seniors to everyone in the United States. Sanders’ proposal would almost completely centralize American healthcare. Doing so might remove many of the billing snafus and other headaches created by having a wide variety of plans, systems and facilities. But such systems are not without flaws. In Canada and the United Kingdom, both of which use nationalized healthcare, there are lengthy waiting lists for specialists such as dermatologists and oncologists, making it difficult for people to access services they have theoretically paid for with their tax bills. Finding a balance between universal and high-quality coverage is one of the most difficult balancing acts confronting policymakers today. However, the polarization around the Affordable Care Act might make it difficult to enact any meaningful reform.
