The Tipping Point: ObamaCare Has Problems; Exposed By Aetna -- Washington Post -- August 16, 2016

Updates

September 3, 2017: fewer and fewer stories on ObamaCare. No longer matters. SF Chronicle, "frustration mounts over premiums for individual health plans." Data points:

• premiums will rise by double-digits (on a percentage basis)
• very small group actually affected -- not enough to get Congress to act
• early retirees, skilled tradespeople, musicians, self-employed professionals, business owners, employees with small employers who don't provide health insurance
• Delaware example: premiums will jump 35% from $740/month to $1,000/month this November

June 21, 2017: Anthem to depart Indiana and Wisconsin.

June 12, 2017: Iowa going down. 

June 6, 2017: Anthem exits Ohio.

May 24, 2017: BC/BS to pull out of Kansas City, MO. Not trivial and it's still not TrumpCare. It's ObamaCare.

April 9, 2017: ObamaCare premiums keep rising -- Bloomberg. Costs up more than 20% in three states that have posted rates.

April 6, 2017: Aetna "pulls out" of Iowa. From the Des Moines Register.

April 4, 2017: Knoxville could be first US city where ObamaCare fails. CNN reports that Humana, the only insurer left on the Affordable Care exchange in the Knoxville area, is set to exit the market in 2018. 

February 15, 2017: IRS will not reject tax filings submitted without healthcare insurance information. 

February 15, 2017: Humana will exit ObamaCare, 2018. FoxNews reports that Aetna was the first insurer to drop out of ObamaCare.

February 1, 2017: Aetna may pull out of ObamaCare next year. Apparently the decision has been made.

November 1, 2016; even the Washington Post seems to be saying -- let's take off our gloves on ObamaCare -- and report it "neutrally." 

October 31, 2016: the tipping point in Arizona -- sky-rocketing 2017 ObamaCaare premiums. 

October 23, 2016: Pittsburgh Tribune headline -- the 2017 ObamaCare premium increases raise suggestions that ObamaCare has begun a "death spiral."

The hefty increases Pennsylvania has approved for next year's individual health plans provide new fodder for Obamacare critics who say the federal law's insurance marketplace is bound to fail.

The state's Insurance Department last week approved increases averaging 32.5 percent for the 2017 plans, making Pennsylvania one of 14 states so far to increase individual rates by an average of more than 30 percent, according to data on ACAsignups.net, a site that tracks enrollment and pricing.

August 31, 2016: The Huffington Post weighs in. I have no idea why. 

August 25, 2016: from Carpe Diem

‘Keep your doctor’ and ‘keep your plan’ got a Pants on Fire rating and have been scrubbed from Obamacare website

August 21, 2016: ObamaCare has gone from the president's greatest achievement to a "slow-motion death spiral." -- Business Insider. 

It has not been a good week for the Affordable Care Act (ACA), better known as Obamacare.

A slew of news, from insurers dropping out to possible fraud among healthcare providers, has all accumulated in a deluge of negative headlines for one of President Obama's signature laws.

In fact, it's gotten so bad that it appears that the whole program itself may be in doubt.

August 19, 2016: why are health insurers dropping out? Expenses underestimated by huge amounts. Same with Medicaid. Cost of ObamaCare Medicaid expansion was almost 50% higher than previously estimated. Congress really, really hurt the US middle class. Sold a huge bill of goods. It appears everyone lost on ObamaCare. 

August 18, 2016: even CNBC admits -- ObamaCare is now in a death spiral.

In other words, the insurance "death spiral" has arrived. Obamacare's critics have long predicted that exchange plans' high premiums and deductibles would keep all but the sickest Americans from enrolling. These people would need so much medical care that insurers would lose money no matter how much they raised premiums. Eventually, insurers would have no choice but to pull out. 

President Obama and Democratic presidential nominee Hillary Clinton have proposed a novel solution to this government-created problem — more government. They're pushing for a government-run "public option" that would usher in de facto single-payer health care. That'd be a disaster for consumers and taxpayers alike.

August 18, 2016: as ObamaCare implodes, Democrats blame insurers. An op-ed at The WSJ.

August 18, 2016: the number of stories and the media posting those stories suggest that we may have reached a tipping point on the day Aetna announced that it was pulling out of ObamaCare except for a very few exchanges. The most recent story from US News:

Aetna's decision to partially withdraw from a major provision of President Barack Obama's health care law is leaving some Americans with only one or no health insurance options, threatening the law's promise to continue to reduce the number of people who have historically been too sick or too poor to access coverage.

Aetna, retaliating in part against a Department of Justice lawsuit, announced Monday that it was leaving exchanges in 11 states, following a string of similar announcements earlier this year that came from other large insurers like UnitedHealth and Humana.

The exchanges, or marketplaces, allow some Americans who don't get health insurance from an employer to compare different plans and buy them at a tax-subsidized rate, mostly in the form of reductions to the amount they pay for their policies each month. But with insurers choosing not to participate, in part because they are losing money by covering people who are sicker and seeking out immediate care after having insurance for the first time, people who shop for these plans are left with even fewer options to choose from.

Some will have only one plan to select, and at least one – Pinal County, Arizona – will have none.

The Obama administration's response is to point out that health insurance companies are still adapting to the law and that millions of people will continue to receive coverage. Officials also point out that health insurance companies can leave or join the marketplace each year. But for many customers, Aetna's pullout will be more than just an inconvenience.  

August 18, 2016: the number of stories and the media posting those stories suggest that we may have reached a tipping point on the day Aetna announced that it was pulling out of ObamaCare except for a very few exchanges. The most recent story from The Wall Street Journal:

Barack Obama’s signature health-care law is struggling for one overriding reason: Selling mispriced insurance is a precarious business model.

Aetna Inc. dealt the Affordable Care Act a severe setback by announcing Monday it would drastically reduce its participation in its insurance exchanges. Its reason: The company was attracting much sicker patients than expected. Indeed, all five of the largest national insurers say they are losing money on their ACA policies and three, including Aetna, are pulling back from the exchanges as a result.

The problem isn’t technical or temporary; it’s intrinsic to how the law was written. By incentivizing insurers to misprice risk, the law has created an unstable dynamic. Total enrollment this year will be barely half the 22 million the Congressional Budget Office projected just three years ago. Premiums, meanwhile, are set to skyrocket, which will further hamper enrollment. It isn’t clear how this can be fixed.

August 18, 2016: the number of stories and the media posting those stories suggest that we may have reached a tipping point on the day Aetna announced that it was pulling out of ObamaCare except for a very few exchanges. The most recent story from Forbes:

The Affordable Care Act (ACA) has produced massive consolidation among health care providers, largely the result of hospitals merging and large hospital systems taking over private doctor practices. In response and in an apparent attempt to improve their negotiating position with the consolidated providers, four of the five major for-profit health insurance companies have proposed mergers: Aetna with Humana and Cigna with Anthem. The Department of Justice (DOJ) has moved to block the mergers, citing a growing threat to health care market competition.

Before making that decision, the DOJ asked Aetna, and likely the other insurers as well, how DOJ action to challenge the merger would affect the insurer’s decision to participate in the ACA exchanges. Aetna CEO Mark Bertloni wrote in reply:

The President asked us to take a long-term view when this law went into effect, and, unlike many others, we have stayed the course and worked constructively to make the public exchange market work. The acquisition of Humana puts Aetna in a significantly better position to continue and expand its support.

Unfortunately, a challenge by the DOJ to that acquisition and/or the DOJ successfully blocking the transaction would have a negative financial impact on Aetna and would impair Aetna’s ability to continue its support, leaving Aetna with no choice but to take actions to steward its financial health. …
Although we remain supportive of the Administration’s efforts to expand coverage, we must also face market realities. … We have been operating on the public exchanges since the beginning of 2014 at a substantial loss. … Our ability to withstand these losses is dependent on our achieving anticipated synergies in the Humana acquisition. …

Our analysis to date makes clear that if the deal were challenged and/or blocked we would need to take immediate actions to mitigate public exchange and ACA small group losses. Specifically, if the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint.

In other words, Aetna’s position is that it would continue to participate in the exchanges, despite the fact that they were a money losing proposition, if a favorable decision on merging with Humana was forthcoming so the insurer would have extra synergies, i.e. profits, elsewhere. The inescapable and disturbing implication here is that due to the ACA, important decisions affecting health care markets, made both by government and by private companies, are now increasingly becoming a function of political negotiations and DOJ market concentration calculations.

August 17, 2016: the number of stories and the media posting those stories suggest that we may have reached a tipping point. The most recent one in The New York Times:

Facing high-profile withdrawals from online insurance exchanges and surging premiums, the Obama administration is preparing a major push to enroll new participants into public marketplaces under the Affordable Care Act.

The administration is eyeing an advertising campaign featuring testimonials from newly insured consumers, as well as direct appeals to young people hit by tax penalties this year for failing to enroll.

But as many insurers continue to lose money on the exchanges, they say the administration’s response is too late and too weak. The companies point to a fundamental dynamic in the marketplace in which too few healthy people are buying policies and too many sick people are filing costly claims.

And the uneasy truce between the government and insurers, which followed adoption of the health care law, appears to be fraying as some of the large companies say they are leaving or sharply scaling back. Aetna warned the Justice Department last month that the company would curtail its participation in the exchanges if the government sued to block its acquisition of Humana, a major competitor.

In a July 5 letter, disclosed by The Huffington Post, Mark T. Bertolini, the chairman and chief executive of Aetna, said that in the event of a lawsuit, “we will immediately take action to reduce our 2017 exchange footprint.” He argued that Aetna needed to form a combined insurance giant to mitigate its losses on the exchanges.

The Justice Department filed suit two weeks later, saying that the combination of Aetna and Humana would reduce competition in violation of federal antitrust law. On Monday, Aetna announced that it would sharply reduce its participation in the public marketplaces next year, offering individual insurance products in 242 of the 778 counties where it now provides such coverage.

An Aetna spokesman insisted on Wednesday that it was the growing financial losses in the exchanges — not the challenge to its acquisition of Humana — that ultimately “drove us to announce the narrowing of our public exchange presence for the 2017 plan year.”

August 17, 2016: Aetna telegraphed that it would exit ObamaCare if merger denied by Obama administration. 
 

Original Post 

 

When I first posted this story, I said the story "had legs."

Wow, was that correct. This story really has legs. Tonight at 8:02 p.m. Eastern Time, The Washington Post has a big story on Aetna saying sayonara to ObamaCare: Aetna decision exposes weaknesses in Obama's health-care law.

And another nominee for the 2016 Geico Rock Award: Carolyn Y. Johnson and Juliet Ellperin of The Washington Post.

Insurance giant Aetna’s decision to stop offering much of its individual coverage through the Affordable Care Act is exposing a problem in President Obama’s signature health-care law that could lead to another fraught political battle in Congress.

Aetna’s announcement Monday night was the latest sign that large insurers are losing money in the Affordable Care Act’s marketplaces, heightening concerns about the long-term stability of a key part of Obama’s domestic policy legacy. But addressing this issue could open the door to a nasty political fight, given that some Republicans have vowed to repeal the law outright.

I quit reading at that point.