Obamacare: What’s next?

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May 4, 2016 by Lisa Brammer

Obamacare turned six-years-old in March. That’s when the legislation, officially named Patient Protection and Affordable Care Act was signed into law. In a nutshell, the reason the healthcare reform law was put in place was to provide Americans with access to affordable health insurance, cut health care costs, and improve existing coverage.

Supporters of the law said the creation of health insurance exchanges would increase competition within the market that would lead to lower costs for consumers. However, I just read an article by Edmund F. Haislmaier called “Insurer ACA Exchange Participation Declines in 2016” which tells us, as the name suggests, carrier participation in the government-run marketplace is declining. Haislmaier explains in his article that there are a bunch of ways to measure competition within the healthcare exchanges, but all metrics seem to be pointing in one direction—down.

According to Haislmaier, in 2013, just before Obamacare took effect, there were 395 insurers that offered Individual-market coverage in the 50 states (and D.C.). Now in 2016, there are 287 exchange-participating insurers.

Some of the carriers that left the exchanges did not do so willingly. State insurance regulators barred those they deemed financially unsound, and others, like some start-up co-ops (created through another provision of the ACA) failed and dropped out. But most insurers that left the exchanges did so voluntarily.

I read in an article in CNNMoney by Tami Luhby that says Obamacare patients are sicker and costlier than expected.  According to a new Blue Cross Blue Shield Association report that looked at millions of enrollees across the country, Obamacare members have higher rates of spendy illnesses and use more medical services like in-patient hospital care, emergency rooms, prescription drugs and doctor visits than patients who enroll in health insurance through employers.

“It’s no surprise that people who newly gained access to coverage under the Affordable Care Act needed health care; That’s why they were locked out of coverage before,” said Ben Wakana, national press secretary, Health Department, in response to the report.

Of course, that is why the “risk corridor” was introduced, to compensate (read government bailout) insurance companies that were left upside-down when providing coverage to a sicker population. But that temporary measure ended and insurance companies that continue to lose money year after year are increasing premiums in response, and indicating they will not participate in the marketplace in the future.

United Healthcare, the biggest health insurer in the United States, for example, says in 2017 they plan to drop-out of most of the Obamacare exchanges they participate in today and will only operate in a few states. Blue Cross, Blue Shield of North Carolina is another carrier that increased rates by over 32 percent in 2016 and may still exit the marketplace in 2017.

So what are Americans in need of affordable insurance doing? According to an article in the Wall Street Journal by Anna Wilde Mathews, many are purchasing short-term health insurance even though they face financial penalties because this type of coverage doesn’t meet Obamacare standards. I read that short-term sales in 2015 were 150 percent higher than they were in 2013 before Obamacare went into effect.

Matthew’s article, “Sales of Short-Term Health Policies Surge” talks about a 34-year-old woman from San Francisco who bought herself a short-term policy in December. She says the monthly cost for her plan plus the ACA-compliant plan she has for her two kids is one-fourth of what she would pay if she had an ACA-complaint plan for all three of them. Despite the penalty, the mom said, “This is saving me a ton of money for the year.” Her pre-ACA plan was less expensive than compliant plans offered now. They are “just not affordable,” she said.

The limits in the short-term policies keeps them affordable—which is what 51 percent of people who purchased them this year said they were looking for, but these limits also keep them from meeting the basic requirements of ACA-compliant plans.

The ever-changing landscape of the exchanges won’t be the end of Obamacare, but it does make you wonder, what’s next?

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