There is no bones about it, Aetna leaving the ACA (aka Obamacare) is a HUGE blow for the healthcare program. What is up for debate however is why they left.
Earlier this month one of the largest insurance providers in the US, Aetna Healthcare, had threatened to leave the Affordable Care Act’s (aka Obamacare) marketplaces citing “millions in losses” over the company’s participation. Yesterday the other shoe fell as Aetna announced that they would be officially leaving most of the ACA marketplaces by the end of this year. While the reasoning behind Aetna leaving has been put into question (more on that in a bit), this is a major blow for the ACA. Let’s breakdown what it all means.
- Aetna follows a litany of other insurance providers, including UnitedHealth and Humana, who had originally been initial supporters of the ACA, but have greatly scaled back their participation or worse outright left the program over the past couple of months. Many insurers have had the same complaints regarding their participation in the ACA marketplaces; they are continually losing money. Aetna made it perfectly clear that they lost a total of $430 million since the insurer started selling in the ACA marketplaces. Their reasoning behind it was simple, many who signed up through the ACA were sicker than they had projected, thus creating a burden on the insurer having to pay higher medical costs. The original idea was that these medical costs would be offset by healthy individuals opting into the ACA marketplaces, but that has yet to take place.
- While it would be easy to brush off Aetna’s reasoning for abandoning the ACA as crass capitalism, but in reality many of these insurance companies really are having a tough time making a profit through the ACA marketplaces. The Kaiser Family Foundation – a non-profit organization that keeps pretty detailed records regarding global health policy – has concluded in many of their reports that insurance companies have struggled to not take massive losses while participating in the state marketplaces.
- The problem of course is that all this eventually bleeds into those individuals wanting to get health insurance through the ACA. Due to so many insurance companies opting out of the ACA, many states are left with one insurer within their marketplaces! If these insurers were to leave these specific states, then millions of people would be left unable to buy insurance coverage at an affordable rate, which would counteract the very reason the ACA was created in the first place! So yeah, this has the potential to get real ugly!
- If there’s a silver-lining to any of this, it’s that Aetna isn’t retreating from the ACA state marketplaces entirely. Out of the 15 state marketplaces they’re currently in, they’ll remain as a health insurance provider in four of them. While bowing out of 11 states is significant, keeping a few exchanges open means it’s working well enough in some areas that leaving them open is profitable. Also there’s something else at play here…
- Many ACA supporters are claiming Aetna’s abandoning of the ACA marketplaces have more to do with Washington politics – small “p” – and less about financial losses. Documents obtained by the Huffington Post show that Aetna’s reasoning over retracting from many of the ACA marketplaces has to do with the Obama administration not approving a merger with Humana, another major insurance provider. Basically proponents of the healthcare law say Aetna was backing-out of the ACA due to a petty political squabble with the Obama administration and not because of failing marketplaces. So in their view, the ACA is still perfectly strong!
- Based on the Huffington Post story, it’s hard to argue that the Obama administration blocking the Aetna and Humana merger didn’t at least play a little part in Aetna wanting to leave the ACA. Hell, Aetna basically says so in those documents! Still, it’s also hard denying that insurance companies aren’t losing millions by participating in the ACA marketplaces. In reality, it’s almost impossible to see what the future holds for the ACA as a whole. But at the moment, Aetna greatly scaling-back from the ACA is a huge blow for the program. That is something everyone can agree on.
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