On Tuesday, Senate Majority Leader Mitch McConnell delayed a vote on his healthcare bill after realizing it couldn't pass in its current form. Thank goodness. The bill leaves many of the Affordable Care Act's core components in place—including a system of state and federal insurance exchanges that are on the brink of collapse.
Now is no time for half-measures. The "non-group" health insurance market, where 22 million Americans buy policies, is deteriorating at an alarming rate. GOP lawmakers were elected to end this calamity—not to enact Obamacare 2.0. Senate Republicans ought to revise the bill over the Fourth of July recess into a policy package that actually repeals and replaces the ACA with market-based, patient-centered reforms.
The ACA’s future is looking bleaker by the day. Consider the insurance marketplaces at the center of the health law. Amid mounting losses, insurers are fleeing the exchanges, leaving millions of Americans with few—if any—options for coverage.
Dwindling competition, rate hikes on ACA exchanges
This year, 21% of enrollees had only a single insurer to "choose" from, according to the Kaiser Family Foundation (KFF). The situation will be far worse next year, as more and more insurers drop out of the exchanges.
This month, the nation's second-largest health insurer, Anthem, announced that it would depart exchanges in Ohio, Indiana and Wisconsin next year. Indiana recently lost another of its major exchange insurers, MDwise. Hoosiers now have just two marketplace providers. Both Humana and Aetna, meanwhile, have pulled out of the 2018 exchanges entirely.
Forty-seven counties in Missouri, Ohio and Washington are at risk of having no exchange insurers at all in 2018, according to the KFF.
Faced with few or no competitors, insurers have been able to hike premiums with abandon. And they've been forced to raise rates because there aren't enough young, healthy enrollees participating in the exchanges to cover the claims made by older and sicker enrollees. Right now, average rates on the Healthcare.gov exchange are more than double the average individual market premium in 2013, pre-ACA, according to (PDF) the Department of Health & Human Services.
Next year's exchange premiums will be higher still. In Michigan insurers are requesting premium increases that range from 19% to as high as 60% in 2018, Crain’s Detroit Business reported. Iowa's exchange enrollees may see premiums jump an average of 43.5%, while Connecticut's two remaining exchange insurers submitted initial requested rate hikes between 15% and 34%.
In addition to sky-high premiums, exchange customers have also been hit with soaring out-of-pocket costs. Average deductibles for a mid-level "silver" marketplace plan rose 20% this year, according to Avalere—even as premiums surged 25% for “benchmark” silver plans on Healthcare.gov.
Patients are reacting to these meager plan options, unaffordable premiums and rising out-of-pocket expenses by turning their backs on the exchanges. Enrollment in the state and federal marketplaces actually fell from 12.7 million in 2016 to only 12.2 million this year.
It's no coincidence that the share of uninsured Americans—a percentage that the ACA was expressly designed to reduce—actually rose in the first quarter of this year, from 10.9% to 11.3%, a Gallup poll shows.
Recall that the ACA simultaneously subsidized individual insurance while also fining Americans who refused to buy coverage. Despite this aggressive carrot-and-stick incentive scheme, patients are still finding exchange policies a losing proposition.
Senate's solution falls short
A market that's unattractive for both patients and insurers won't survive much longer. That means Senate Republicans have little time to waste in their drive to repeal and replace the ACA.
Sadly, the current Senate reform package falls far short of that goal. In particular, the legislation does far too little to roll back the insurance market regulations that are mainly responsible for rising coverage costs.
These include the law's essential health benefits mandates. By requiring all policies to cover a long list of treatments and services, these provisions have removed simple, low-cost coverage options from the market.
Like the House bill, the Senate legislation would empower states to waive these mandates but wouldn't wipe them off the books entirely.
Lawmakers have the chance to improve the current bill, but time is running out. They should move quickly to adopt policies that foster a strong, competitive healthcare market that provides the kind of affordable, quality coverage that patients actually want.
Sally C. Pipes is president, CEO and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Follow her on Twitter @sallypipes.