Thursday, August 4, 2016

According to Aetna We Have Two Kinds of Insurance Companies Under Obamacare: The "Less Worse Off" and the "Worse Worse Off"

Surviving Co-Ops Sue Feds Over Inadequate Obamacare Reinsurance Payments While Aetna Complains the Payments Aren't Enough For Their Only "Less Worse Off" Financial Results

I don't know if you noticed the recent juxtaposition between the surviving co-ops complaint that they shouldn't have to pay the big legacy carriers money under the Obamacare "3Rs" reinsurance scheme with Aetna's complaint this week that these same payments aren't enough for them to be confident they will continue in the exchanges.
Of the original 23 insurance co-ops created under the Affordable Care Act, only seven remain.

And, those seven are having a tough time of it. So tough that at least three are suing the federal government over the way the "3Rs" reinsurance scheme works. The are complaining that the risk adjustment provisions of the law unfairly favor the big legacy health plans such as the big publicly traded plans, like Aetna, and the big market share Blue Cross plans.

So, now the co-ops complaint is that they'd be doing fine if it weren't for the Obama administration's flawed risk adjustment program designed to move money from the plans with the healthiest customers to those with the sickest.

The irony that the risk adjustment system is telling us that these co-ops have the healthiest consumers and are still going broke should not be lost.

Meantime, one of the legacy carriers, that has been benefiting from these payments, Aetna, is threatening to pull out of the exchanges because of their big 2016 Obamacare losses and is blaming part of it on the failure of the same risk adjustment system to adequately reimburse them for their losses!

CEO Mark Bertolini told Bloomberg, "the mechanism of risk adjustment in those exchanges is not going to appropriately reflect" their expected $320 million in Obamacare exchange underwriting losses in 2016.

According to Bloomberg:
Bertolini said big changes are needed to make the exchanges viable. Risk adjustment, a mechanism that transfers funds from insurers with healthier clients to those with sick ones, "doesn't work," he said. Rather, than transferring money among insurers, the law should be changed to subsidize insurers with government funds, Bertolini said.

"It needs to be a non-zero sum pool in order to fix it," Bertolini said. Right now, insurers "that are less worse off pay for those that are worse worse off."
Well that's a mouth full.

While the co-ops complain they're getting screwed by having to pay money to the big guys, one of the big guys is complaining they are only less worse off and suggesting the government just has to make up their losses or they are going to take their marbles and go home.

And, let me suggest to Mr. Bertolini that before any Congress appropriates more money to subsidize Aetna in the exchanges there is a better chance Democrats will pass a public option for him to compete against.

So we have two kinds of insurance companies in Obamacare.

The "less worse off" and the "worse worse off."

Other than that, the Obamacare market is "stable."
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