In struggle over future of ACA exchanges, consumers caught in the middle

I often think of the old expression "I only have two hands" when my plate seems too full or in any situation when people or organizations have expectations assigned to them that they can't possibly meet. Increasingly, it also seems to apply to health insurers operating on the Affordable Care Act exchanges.

As UnitedHealth CEO Stephen J. Hemsley put it, "we can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself."

Consider some of the recent news about the big five insurers and their experiences with the ACA exchanges:

  • UnitedHealth has threatened to pull out of the marketplace entirely in 2017.
  • Anthem's Q4 earnings also took a major hit from its individual-market losses.
  • Aetna's Mark Bertolini has said ACA-related losses are "not breaking the bank" but also expressed "serious concerns" with the exchanges' sustainability.
  • Cigna's David Cordani said that as expected, the insurer's ACA exchange business has not yet been profitable, and he also wants the exchanges to give health plans more flexibility.
  • Humana will set aside a premium deficiency reserve for 2016, as it expects its commercial medical memberships to decline by 200,000 to 300,000.

It's undeniable that some insurers are losing money on the exchanges, as numbers in earnings reports typically don't lie. They also have some valid concerns about why this is happening, including lax rules surrounding special enrollment periods, which the federal government has agreed to tighten.

Some officials are starting to take notice, as well. North Carolina Insurance Commissioner Wayne Goodwin--where Blue Cross Blue Shield lost $400 million on ACA policies last year--sent a letter last week to Department of Health and Human Services Secretary Sylvia Mathews Burwell laying out his fears about the state's marketplace.

"Insurers cannot continue to have annual losses in the hundreds of millions and be expected to continue 'business as usual,'" Goodwin wrote. "I am highly concerned insurers may withdraw from the individual market in North Carolina altogether."

Meanwhile, Sen. Richard Blumenthal (D-Conn.) practically begged UnitedHealth to stay in the marketplace in a letter he sent in late December.

But Covered California Executive Director Peter Lee isn't buying it.

Last week he blasted UnitedHealth's pronouncement that it may exit the exchanges, saying the nation's largest insurer should blame its own poor business decisions for its losses, not the ACA. "Instead of saying we screwed up, they said Obamacare is the problem and we may not play anymore," he told Kaiser Health News.

So are insurers crying wolf about their exchange woes or can we expect a legitimate crisis if the margins of the for-profit giants don't improve? As is the case with any complicated issue that blends politics and business, the answer is somewhere in between the two extremes.

Given how much the politically charged ACA relies on private health plans to participate in its marketplaces, major insurers know they have a lot of power to influence policy.

The companies' statements about the exchanges show they're eager to wield that power--and they don't plan to stop any time soon. Anthem CEO Joseph Swedish made a subtle but clear reference to that effect during the insurer's fourth-quarter conference call, saying "you can be assured we are contributing to the dialog to form a long-term, sustainable and affordable marketplace."

This is shrewd from a business standpoint, with a highly regulated industry using whatever leverage it has to win concessions from the government.

The trouble, though, is that some major insurers have started to take it even further, ending commissions for gold-level plans and those sold outside of the standard enrollment periods. The ACA is supposed to prevent such weeding out of sicker, higher-cost members, yet one could argue that due to problems with government programs such as risk corridors, which are supposed to serve as a safety net for insurers, the companies feel they are left with little other choice.

Whether they do indeed have no choice is up for debate, but my estimation is that major health insurance companies wouldn't bother complaining about the exchanges if they weren't a major pain point for their businesses.

Even more important, though, is that consumers are increasingly likely to get caught in the crosshairs of the struggle between health plans and their regulators. Destabilization of the ACA marketplaces risks eroding the historic coverage gains the healthcare law has made, and when insurers feel they're forced to discourage higher-cost individuals from enrolling in marketplace plans, those who need insurance the most get left out in the cold.

So for the sake of the people both the government and insurers are supposed to serve, here's hoping the two sides don't draw out their "dialog" much longer. - Leslie @HealthPayer

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