August 19, 2016
UnitedHealth expects to lose $850 million on Obamacare in 2016, while Aetna, Anthem, and Humana are all on track to lose at least $300 million each on their ACA plans this year, according to company reports and estimates from Bloomberg Intelligence. UnitedHealth says it’s quitting 31 of the 34 states where it sells ACA policies. Humana is exiting 8 of 19 states and reducing its presence to just 156 counties, from 1,351 a year ago. Anthem hasn’t announced plans to change its participation in the program.
On Aug. 15, Aetna said it will stop selling Obamacare plans in 11 of the 15 states where it had participated in the program, reversing its plan to expand into five new state exchanges in 2017. “The exchanges are a mess as they exist today,” says Aetna Chief Executive Officer Mark Bertolini. “They’re losing a lot of money for a lot of people.”
Source: Obamacare’s in Trouble as Insurers Tire of Losing Money – Bloomberg
August 18, 2016
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.
Source: The Unstable Economics in Obama’s Health Law – WSJ
August 17, 2016
Exhibit 1 compares insurers’ projected per-member-per-month (pmpm) medical expenses with actual medical claims for ACA-compliant individual coverage in 2014.10 Across the market, medical claims were 5.7 percent higher than projected ($429 vs. $406 pmpm). Some insurers did considerably worse than others. The quartile of insurers with the highest claims (75th percentile) underestimated their claims by an average of 35 percent, whereas the lowest-claim quartile projected their claims much more accurately, within 4 percent, on average, similar to the average claims underestimate of 6 percent marketwide.
Source: How Has the Affordable Care Act Affected Health Insurers’ Financial Performance? – The Commonwealth Fund
August 17, 2016
In 2014 twenty-eight states and the District of Columbia had expanded Medicaid eligibility while federal and state-based Marketplaces in every state made subsidized private health insurance available to qualified individuals. As a result, about seventeen million previously uninsured Americans gained health insurance in 2014. Many policy makers had predicted that Medicaid expansion would lead to greatly increased use of hospital emergency departments (EDs). We examined the effect of insurance expansion on ED use in 478 hospitals in 36 states during the first year of expansion (2014). In difference-in-differences analyses, Medicaid expansion increased Medicaid-paid ED visits in those states by 27.1 percent, decreased uninsured visits by 31.4 percent, and decreased privately insured visits by 6.7 percent during the first year of expansion compared to nonexpansion states. Overall, however, total ED visits grew by less than 3 percent in 2014 compared to 2012–13, with no significant difference between expansion and nonexpansion states. Thus, the expansion of Medicaid coverage strongly affected payer mix but did not significantly affect overall ED use, even though more people gained insurance coverage in expansion states than in nonexpansion states. This suggests that expanding Medicaid did not significantly increase or decrease overall ED visit volume.
Source: Medicaid Expansion In 2014 Did Not Increase Emergency Department Use But Did Change Insurance Payer Mix
August 12, 2016
Blue Cross Blue Shield of Alabama is seeking an average rate increase of 39 percent on individual plans offered through the Obamacare marketplace, according to the Centers for Medicare & Medicaid Services.The proposed rate hikes will affect more than 160,000 people in Alabama who purchase insurance through the federal exchange, or about 5 percent of Blue Cross membership.Rate increases range from 26 to 41 percent, depending on the type of plan. Proposed increases are lowest for bronze plans, which offer the least amount of coverage, and greatest for the most popular silver plans.Blue Cross is the only insurance company that will offer Alabamians individual insurance plans through the exchange next year after the departure of Humana and UnitedHealth. Those departures were announced earlier this year.
Source: Blue Cross proposes rate hike of nearly 40 percent on some Obamacare plans | AL.com
August 12, 2016
2016 average premiums were up substantially in most states (see map below) and, with no one making money, 2017 seems no better. According to The Hill:
Already, many insurers this year are proposing substantial rate hikes with the hopes of making up for higher recent medical costs. The average premium increase next year is about 9 percent, according to an analysis of 19 cities by Kaiser Family Foundation. But some hikes are far higher: Blue Cross Blue Shield has proposed increases of 40 percent in Alabama and 60 percent in Texas.
Source: Obamacare On “Verge Of Collapse” As Premiums Set To Soar Again In 2017 | Zero Hedge
August 9, 2016
The Department of Health and Human Services’ (HHS) annual report on Medicaid’s finances contains a stunning update: the average cost of the Affordable Care Act’s Medicaid expansion enrollees was nearly 50% higher in fiscal year (FY) 2015 than HHS had projected just one year prior. Specifically, HHS found that the ACA’s Medicaid expansion enrollees cost an average of $6,366 in FY 2015—49% higher than the $4,281 amount that the agency projected in last year’s report.
Source: Government Report Finds That ACA Medicaid Enrollees Much More Expensive Than Expected | Mercatus