Thursday, August 18, 2016

Latest Proposals to Fix Obamacare Come Up Way Short--The Insurance Industry Trade Association Joins the List of Deniers

In my last couple of posts, I have lamented the degree to which prominent Obamacare supporters have been denial about the trouble The Affordable Care Act exchanges are in. Now we can add the insurance industry trade association, AHIP, to the list.

With the Obamacare exchange exits by the publicly traded health plans, the not-for-profit Blue Cross and regional HMOs now form the backbone of the Obamacare exchanges. I am not predicting any imminent exits on their part, but another year will be a different story if this isn't fixed. If you look at the size of their statutory surplus accounts and their staggering ongoing losses in the face of reports the risk pool continues to deteriorate, it's a simple exercise in math so see what's coming.

The clock is just plain ticking on the time left to fix Obamacare.
But some people still don't see the imperative to act. This from the Fiscal Times:
Larry Levitt, a senior vice president of the Kaiser Family Foundation and a strong champion of the Affordable Care Act, said in a tweet today [August 16th] that the Obamacare open enrollment period for 2017 will be key in determining the importance of Aetna's stunning withdrawal from the program exchanges.
"If signups grow, concerns [about Aetna] will fade," he wrote. "If not, expect a debate on fixes."
Let's summarize: Today 40% of the eligible exchange population is enrolled and we need closer to 75% to get a healthy risk pool, the health plans have requested 2017 exchange rates that are, according to Charles Gaba who closely tracks Obamacare, a national average of 24% more, the deductibles and co-pays will be bigger in 2017, and the networks will be narrower. After all of this there is a reason to think people will find the Obamacare plans more attractive and the enrollment will be better in 2017?

Then there are all of the reports of a "smoking gun" over Aetna threatening the DOJ to pull out of the exchanges if their Humana merger wasn't approved. I have always wondered if Aetna has been trying to get on the good side of the administration for the last three years over Obamacare because of a larger agenda--protecting their Medicare Advantage payments that the Secretary of HHS can tweak one way or the other every year, and more recently, the Humana merger.

Apparently some people now think that since Aetna has been "outed" the Obamacare exchanges are just fine and Aetna's underwriting losses--or any of the other carriers losses, jumbo rate increases and exchange exits--aren't real.

Meantime, the Robert Wood Johnson Foundation (RWJ) is out with a report that points to a couple of steps to stabilize the Obamacare exchanges.

RWJ suggests increasing the tax credits to make the programs more affordable. First, just which Congress are they expecting to be elected that will approve spending more money on Obamacare? They want to increase taxpayer subsidies on a program that is clearly failing to attract the people it was supposed to serve?

Once again, these Obamacare supporters are focused on the one-half the market that gets subsidies and just ignores the other half of the people in the individual market who are not eligible for a subsidy. These are the people who don't have employer-based coverage or Medicare and their incomes disqualify them from a subsidy. These are people who have both bought and haven't bought Obamacare compliant coverage. What is RWJ suggesting for the millions of these people that pay full freight and sustain the big rate increases on their own?

RWJ is also suggesting putting in place a federal "fallback" plan that could be similar to the Federal Employers Health Benefits Plan or a plan that would leverage Medicare to meet any gaps in carrier coverage. Sounds like the public option to me. Again, without 60 votes in the U.S. Senate and Democrats taking control of the House in the 2016 elections, just how will that be accomplished in time to save Obamacare from the track it is on?

Then there is the president of AHIP, the health insurance industry trade association, in an op-ed in USA Today. She talks about fixing the "risk corridor" reinsurance program that paid only 12% of expected payments last year because more companies were losing money than making money (by a ratio of 8:1) and thereby unable to pay into the fund. She also wants relief from the health insurance tax that partially funds Obamacare. So, her proposal can be easily translated to asking Congress to pony up more money for the insurance companies to bail them out. Good luck with that.

She also calls for the administration to tighten up the late enrollment process so consumers can't game the system and buy coverage when they get sick. On its own not a bad idea but a relatively small part of any solution.

The scope of these AHIP proposals is shocking when coming from the insurance industry. Shocking because they completely ignore the fundamental financial problem Obamacare is having--too many sick people have signed up and not enough healthy people because the insurance plans the carriers are offering are so unattractive to all but the sickest because of the tight regulatory box Obamacare puts them in.

Does the insurance industry trade association not understand that the solution lies in a viable risk pool driven by a substantial growth in enrollment in turn driven by offering people plans they want to buy? Do they not understand that just asking for more money to prop up a failed business plan is no solution? Do they not understand that there is no way any Congress--Republican or Democratic--is going to give the insurance companies more money?

The Republicans aren't going to bail insurers out because they never thought this was going to work in the first place--and resent the carriers for their "collaboration" with the Obama administration. Democrats aren't going to bail them out because they will use any political capital from an Obamacare failure to move to the public option, if not single payer. They never trusted the carriers in the first place.

I don't know whose denial about the state of affairs over Obamacare is worse, some of the Obamacare defenders or the insurance industry trade association.

Talking about fiddling while Rome is burning.

Congressional action to fix Obamacare even in 2017 will be problematic. But there are thousands of pages of regulations the next President does control that can provide fertile ground for substantial improvement if not a fundamental fix.
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