Big Premium Increases and Significant Health Insurance Players Exit the Exchanges
Obamacare is in the news with double digit premium increases as well as Aetna, UnitedHealth, Humana and many other significant players in the health insurance market pulling out of the Affordable Care Act (ACA) exchanges. This leaves many consumers left seeking new plans.
The online health insurance marketplace, or exchanges, allow consumers, who do not have health insurance through employment, to purchase policies at a tax-subsidized rates. Insurers are required to provide qualified health plans falling within the standards of the ACA. The standardization of health plans created competition and controlled insurance price increases.
Why are large health insurance providers exiting the exchanges? Mainly because it has become costly for the insurers to provide quality coverage at competitive premiums. Mark Bertolini, CEO of Aetna, explains that there are not enough healthy policyholders to financially counterbalance those with major and costly health issues. Insurers are now covering sicker patients and first time policyholders who are seeking immediate care. Aetna is expecting losses of about $430 million. UnitedHealth is anticipating losses of about $1 billion. By 2017, Aetna will be exiting 11 out of 15 exchanges, Humana is expected to exit 4 out of 15 exchanges, and UnitedHealth will pullout from 26 of 34 exchanges.
Bad business for all insurers? It may be bad news for the large players in the health insurance market but the exchanges have been a business opportunity for others. Startups such as Bright Health and Canopy Health Insurance will have the opportunity to offer insurance in states with limited competition. “This is a huge opportunity. The individual health insurance market is a growing marketplace. I think there’s a real need for this,” explained Bob Sheehy, Bright Health’s CEO and former top executive at UnitedHealth, in an interview to Modern Healthcare in April.
What does this mean for consumers? In many rural counties consumers will only have one or two health insurance options. Some may even need to choose a new provider, and as a result, be forced to change doctors and hospitals. For consumers on exchange plans whose provider has left the exchange, they will automatically be re-enrolled into another exchange plan that is similar to their current plan. Of course consumers have the choice to enroll in off-exchange plans without the benefits of federal government subsidies.
The Obama administration weighs in. They pointed out that health insurance companies are still adopting the new law yet millions of Americans will continue to receive some form of coverage to avoid penalties. Insurance companies are allowed to exit and enter the exchanges every year. Regulators are currently reviewing registrations by insurance companies that plan to participate in the exchanges in 2017.
Above we have addressed the changes in the health insurance market and how it effects insurance companies as well as consumers. To understand all the changes, JLK Rosenberger is here to help!