For Americans who rely on insurance plans offered on marketplaces under the terms of the Affordable Care Act, the mixed signals put out by insurance companies regarding their ongoing participation in the program have been unsettling.
But after a string of withdrawals and closures, we finally hear a major health insurer talking about expanding its marketplace presence.
Speaking to shareholders on Thursday, the CEO of the health insurance company Aetna said he's worried about the sustainability of Obamacare, but he also said that the company has no plans to pull out of any more state insurance exchange markets.
Last October, Aetna withdrew from public insurance exchange markets in Kentucky, Utah and Washington D.C. That move brought the number of state public insurance markets served by Aetna, the country's 3rd-largest health insurer, down to 15.
Aetna's pullout from Kentucky, Utah and Washington D.C. came just a few months before UnitedHealthcare, the country's biggest health insurer, threatened to withdraw from Obamacare altogether if it didn't become profitable for the company.
But even with the drawback, it looks like Aetna is set to join more public exchange markets in 2016. Aetna's CEO Mark Bertolini said in January that Obamacare is not a make or break deal for the company, and it will stay onboard unless it becomes impossible to turn a profit.
Aetna reported losses in 2015, but is back in the black after jacking up rates for 2016. As recently as April, Bertolini said that public insurance markets were a big opportunity and staying in is a good investment.
Obamacare has not been the greatest gift to the health insurance industry. Healthcare for all means healthcare for Americans with preexisting conditions, some of which are very severe and costly to treat. This takes a serious bite out of health insurance companies' profits.
Apart from the many applicants with preexisting conditions, another reason that public exchange markets are unprofitable for health insurance companies is the "free rider" problem. According to The Hill, insurers claim that some applicants are taking advantage of special enrollment periods to sign up for insurance coverage when they are sick, only to cancel coverage after receiving the treatment they need.
The head of the Centers for Medicare and Medicaid Services, Andy Slavitt, said in January that the CMMS is working to solve the free rider problem. The Obama administration is reportedly considering a mandate which could force Americans to keep their coverage for longer terms, but in the meantime many insurers are raising rates to cover the increased costs providing healthcare under the Affordable Care Act (ACA).
Abuse of the system and the higher-than-average costs of covering ACA applicants is causing losses for insurance companies and has already led a few to pull out of certain state markets. Many health insurance companies have warned that rates will have to keep going up in 2017 to make up for losses from the public insurance markets created by the Affordable Care Act.
So far, we haven't seen health insurance companies pass costs from Obamacare public exchange markets on to their privately-insured customers. But the insurance business is just that, a business, and the need to turn a profit may well force insurers to hike insurance premiums across the board.
The 2 worst-case scenarios for publicly- and privately-insured Americans is that either major insurance companies pull out of the Obamacare market entirely, or worse yet, pass the costs of insuring Obamacare recipients on to their private customers.
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Image courtesy of Centers for Medicare & Medicaid Services