As multiple major insurers suggest they might leave the federal and state exchanges if they continue to lose money on their ACA business in 2016, the question is whether they are likely to make good on the threats or are more likely aiming to pressure the federal government into making the marketplace and its requirements more favorable for insurers' long-term participation.
Several experts suggest the answer is both, and the possibility of insurers leaving is quite real. If they do leave the impacts could be significant in different markets across the U.S., depending on what options (if any) would be left for consumers, whether the voids would be filled by smaller insurers, and whether there would be sufficient participation to keep the exchanges viable.
The issue is drawing particular attention in North Carolina, where its largest insurer, Blue Cross and Blue Shield is losing money. As the only ACA plan in 23 counties, the insurer’s exit could leave consumers with the choice of no plan or forced to get a plan in another county. That second choice assumes any plans will remain in the state, as there are only other two insurers offering ACA plans in North Carolina, Aetna and UnitedHealthcare, which have also been dealing with losses in their ACA business.
Another factor could come into play in Florida, where the state’s office of insurance regulation is supporting Aetna’s pending acquisition of Humana only on the condition that Aetna grow its participation in the state insurance exchange, which would prevent the company from potentially opting out.
Here is what several health insurance experts tell Healthcare Dive:
Deborah Dorman-Rodriguez, leader of the healthcare practice group at Freeborn & Peters LLP in Chicago and former chief legal officer of Health Care Services Corp.
“Insurers could end up leaving the health insurance exchange marketplace if they are unable make it work without sustaining significant financial losses, so the threats to leave the marketplace are not idle ones,” she says.
“However, managing the risks of populations insured through the various marketplaces is still new to insurers and they will continue to learn and improve on doing that. If a large number of insurers were to withdraw from the exchange marketplace it could be a detrimental to consumers in terms of limiting their choices of insurance products. If withdrawal from the marketplaces happens it remains to be seen what smaller insurers or new entrants would emerge and whether they will be successful.”
Duane Harrington, managing director and leader of consulting firm AArete’s healthcare practice
Harrington suggests insurers will look at their performance in each of the states in which they operate, and any decisions to exit certain markets will have varied levels of impact.
“While states such as Michigan, Ohio, Texas, Pennsylvania, Wisconsin, Florida, Arizona, and Illinois all reported having 10 or more issuers in their 2015 state marketplaces, other states such as Alabama, Maine, Mississippi, North Carolina, and West Virginia reported three or fewer,” he says.
“Broadly speaking, a variety of plans have been offered in the marketplace including those from Blue Cross-affiliated insurers, Medicaid insurers, provider-sponsored insurers, local or regional plans as well as those with a national footprint. Nationally, it looks like a good mix for competition, but it’s within the individual markets where the profits or losses are incurred, and where the impact of the exit of an insurer should be measured. That stated, there are insurers that are operating within the exchanges profitably, and where there are profits, insurers will find a way into those markets.”
Harry Nelson, founding partner of healthcare law firm Nelson Hardiman
Nelson suggests some insurers, such as UnitedHealth, appear to be mapping out a future without the exchange population, while others, such as the Blues, are likely committed.
“The exit of multiple insurers who had previously had a broad presence on the exchanges would be a major setback for the ACA vision and for the Obama administration,” he says. “The government is counting on the insurers to offer sufficient choices for consumers to make the exchanges viable… While a small number of insurer exits isn’t going to make a difference and while smaller regional insurers might fill some voids, it would be a bad indicator for long-term viability if a critical mass of insurers exited the exchanges.”
Darryl S. Weiman, MD, JD, author of Medical Malpractice and the Law
“If the big insurance companies pull out of the exchanges, it is unlikely that the smaller companies will be able to pick up the extra patients,” he says, adding if the government has to supply more support for premiums, healthcare costs will continue upward. “It is also likely that the quality of the health insurance will decrease since the people will have fewer options due to less competition,” he says.