4 surprising ways the ACA could create a healthcare bubble

Photo credit: Getty/designer491

In the way hardly anyone saw the 2009 financial crisis coming, everybody may be overlooking the possibility of a healthcare bubble tied to the Affordable Care Act, according to an op-ed published by The Hill.

Bryan Rotella, founder and managing shareholder of Rotella Legal Group, cites a conversation with health insurance expert Joe Cortelli, who noted that “we have done nothing to improve the outcomes of the 10 percent of the population that drives 80 percent of our claims costs.”

Rotella argues that a bubble is on the rise due to a few factors:

  • Members who have gotten health plans from the ACA exchanges are sicker and more expensive, as detailed in a study from the Blue Cross Blue Shield Association.
  • Premiums are rapidly increasing as two of the ACA’s three premium stabilization programs expire in 2017. Some policy analysts have suggested taking a second look at extending the reinsurance program, according to FierceHealthPayer’s coverage.
  • In a parallel to the movie“The Big Short,” very few people have gone around asking doctors how they would respond when high-risk patients were “shuttled” to exchange plans, Rotella observes. Indeed, physician surveys demonstrate broad dissatisfaction with the ACA.
  • Big health systems and insurers are too big to fail. To prevent a death spiral, the “public option” may be deployed to boost competition on exchanges. “What irony, as the ‘public option’ looks an awful lot like the government bailout of the mortgage banks,” Rotella points out.

President Barack Obama and Democratic nominee Hillary Clinton have both announced their support for a public plan option in places with inadequate market competition, an increasingly relevant option as UnitedHealth, Humana and Aetna are considering or have already reduced their ACA exchange presence.

- read the op-ed