Insurance giant Aetna’s decision to stop offering much of its individual coverage through the Affordable Care Act is exposing a problem in President Barack 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.
If insurers continue to lose money, more are likely to withdraw from the marketplaces, a move that would reduce choices for consumers and could contribute to higher premiums. In one county, Aetna’s exit in 2017 could leave no insurers offering policies through its marketplace.
Aetna said it will exit 11 of the 15 states where it offers coverage through the Affordable Care Act, widely known as Obamacare. That affects about 80 percent of its customers covered through insurance marketplaces.
The marketplaces, known as insurance exchanges, were created to provide coverage for Americans who cannot get affordable health benefits through a job. A key aspect of the health-care law, the marketplaces allow people to purchase insurance online with subsidies based on their income.
Earlier this month, Humana said it will cut back its participation on the exchanges from 15 states to 11. On an earnings call in July, UnitedHealth Group chief executive Stephen Hemsley announced that his company plans to remain on “three or fewer exchange markets.”
In a reversal of expectations, Anthem said it is projecting mid-single-digit losses on the individual plans it sells on the exchanges for 2016. And Cigna has said that it is losing money on the exchanges, although the insurer is planning to expand its marketplace presence to three new states in 2017.
The health-care law is likely to prompt another heated political battle, regardless of which party wins the White House and control of Congress in November.
GOP presidential nominee Donald Trump has suggested that he will seek to scrap it altogether. Quoting a news story by Reuters on Tuesday, he tweeted, “Another health insurer is pulling back due to ‘persistent financial losses on #Obamacare plans.’ Only the beginning!”
Democratic nominee Hillary Clinton has pledged to modify the law to expand coverage and wants to add a public insurance option.
Both candidates’ proposals will face stiff political headwinds, but several health-care experts said lawmakers could still pursue more modest changes to make the program work better.
“The idea of somehow repealing it is far-fetched,” said Joseph Antos, a resident scholar at the American Enterprise Institute. “But changing it is not far-fetched.”
There are many possible policy remedies, but the main issues have to do with the risk pool – the balance between healthy people and sick people with higher health-care expenses. Many insurers have noted that people who signed up for health insurance on the marketplaces are sicker, putting greater demands on the system.
“You have here a situation which all of us who care about the exchanges have to worry about,” said Zeke Emanuel, who served as a top White House health policy adviser during Obama’s first term and is now vice provost for global initiatives at the University of Pennsylvania. “There is a problem with the risk pool. There is a problem with the numbers of people signing up.”
One solution would be to entice more people – particularly healthy ones – to sign up for insurance, whether through a more robust public outreach campaign or by warning them about escalating financial penalties for not having coverage. Another would be to find new and better ways to give insurers that cover the sickest people greater financial relief.
“There are incremental steps the administration can take to address that, but I think more significant changes would require legislation that could get bipartisan support,” said Mark McClellan, director of the Margolis Center for Health Policy at Duke University.
In a statement Tuesday, Clinton spokesman Jesse Ferguson said the candidate is committed to expanding the law Obama signed in 2010.
“Hillary Clinton has outlined concrete plans to make health coverage more affordable in and out of the marketplaces, with more choices, expanded relief for costs, aggressively containing prescription drug expenses and the choice of a public option,” he said.
Many of these initiatives, along with any move to stiffen the financial penalties for not purchasing insurance, would require congressional approval.
In the meantime, however, some insurers are pulling back – and at least one county in Arizona has no insurers slated to sell marketplace plans in 2017.
Aetna chief executive Mark Bertolini said in a statement that there are not enough healthy people to financially offset those with major health problems who require high-cost care. As of June 30, Aetna covered 838,000 people through the exchanges. In total, 11.1 million people were signed up for the marketplace plans at the end of March.
Katherine Hempstead, a senior adviser at the Robert Wood Johnson Foundation, said that these national carriers haven’t traditionally been the biggest part of the exchanges.
“I think the market could survive without these guys,” she said. “Obviously, it would be better to see lots of people seeing a lot of opportunity in this space. . . . But I don’t think it’s a chapter in a Greek tragedy.”
The decisions also come as four of the major insurers are in a battle with the Obama administration. The Justice Department has blocked two proposed mergers: between Aetna and Humana, and between Anthem and Cigna. The companies are fighting the decisions.
Anthem has said that if its proposed deal with Cigna is allowed to go through, it will increase its exchange offerings to nine additional states.
Caroline Pearson, a senior vice president at Avalere Health, a health-care consulting firm, said that the lawsuit may have affected the timing of Aetna’s announcement – in late April, Bertolini described the marketplace as “a good investment” – but not the underlying facts about the viability of the marketplaces.
House Energy and Commerce Committee Chairman Fred Upton, R-Michigan, said in a statement that the administration deserves the blame. “Plans are rapidly exiting the so-called marketplace because Washington has damaged and upended the insurance markets,” he said.
But Rep. Diana DeGette (Colorado), the top Democrat on Energy and Commerce’s subcommittee on oversight and investigations, said in an interview Tuesday that Republicans “seem to be hell-bent” on holding hearings “to support their multitude of efforts to repeal the ACA” and “have totally neglected their duty to try to fix it.”
DeGette said multiple senior and influential Republicans have told her privately they are open to tweaking the health-care law after the November election, when they have a clearer sense of the new political landscape.
“There’s a long list of things large and small that need to be adjusted,” she said. “But I don’t think anyone can say what that is until we know what the new Congress looks like.”
