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Aetna, UnitedHealth and Humana provide important lesson on feasibility

Aetna to Quit Most Obamacare Markets, Joining Major Insurers

By Zachary Tracer
Bloomberg, August 15, 2016

Health insurer Aetna Inc. will stop selling individual Obamacare plans next year in 11 of the 15 states where it had been participating in the program, joining other major insurers that have pulled out of the government-run markets in the face of mounting losses.

While the Affordable Care Act, known as Obamacare, has brought coverage to millions, the new markets have proven volatile for some of the largest for-profit insurers. Aetna said earlier this year that it expected to lose $300 million on the plans. UnitedHealth Group Inc. and Humana Inc., which Aetna has agreed to buy for $37 billion, are also pulling out after posting hundreds of millions of dollars of losses.

“The vast majority of payers have experienced continued financial stress within their individual public exchange business,” Aetna Chief Executive Officer Mark Bertolini said in the statement. “Providing affordable, high-quality health care options to consumers is not possible without a balanced risk pool.”

http://www.bloomberg.com/news/articles/2016-08-16/aetna-quits-most-obamacare-markets-joining-other-major-insurers

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Aetna to Pull Back From Public Health Care Exchanges

By Robert Pear
The New York Times, August 16, 2016

Kevin J. Counihan, the chief executive of the federal insurance exchange, said the marketplace would remain strong and vibrant despite Aetna’s decision.

“It’s no surprise that companies are adapting at different rates to a market where they compete for business on cost and quality, rather than by denying coverage to people with pre-existing conditions,” Mr. Counihan said Monday.

http://www.nytimes.com/2016/08/16/us/politics/aetna-health-care-law-marketplace.html

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Comment:

By Don McCanne, M.D.

Three of the nation’s largest insurers - Aetna, UnitedHealth and Humana - are pulling out of the ACA insurance exchanges because they have been unable to use their business model to make a profit. Although over fourth-fifths of enrollees are receiving government subsidies for these plans, that is not enough for the insurers. They also want the government to pay for those who need significant amounts of care (reinsurance). They want to abandon covering risk while they sell us wasteful administrative services.

The failure stems from the fact that our public administrators and legislators bent over backwards to try to make reform work for the private insurers, but health care is now so expensive that the insurers’ model requires unaffordable premiums and unaffordable deductibles and other cost sharing. They pushed the limit on premiums and deductibles and that has resulted in tens of millions remaining uninsured or unable to pay their out-of-pocket costs.

And the government’s response? The marketplace remains “strong and vibrant” because insurers compete on “cost and quality” rather than “denying coverage to those with pre-existing conditions.” Yet the nation’s largest insurers cannot compete on those terms.

It is difficult to believe that members of the administration and Congress are so dense that they cannot see that it is this model of health care financing that is creating so many of our problems. Mention a model that actually does work - single payer - and they plead that it is not feasible, that it is not capable of being done. But they have already proven that the fragmented system under ACA is not capable of covering everyone with affordable health care. It is not a feasible method of ensuring affordable health care for all. Single payer is.