Obamacare indeed appears to be the disaster that never ends.
According to reporting from the International Business Times, nearly 1.5 million people from 32 states could see their coverage under the Affordable Care Act (ACA) go the way of the wind in 2017.
The problem, of course, is that insurance companies continue to bail on the health care exchanges, and are doing so because of…what else…cost. The requirements for insurers, including that enrollees with pre-existing conditions cannot be denied coverage, have simply made their continued participation unviable.
Although it was expected that enrollment would be substantial among higher-risk groups of people who have not, historically, maintained coverage, the belief was that the resulting higher costs incurred would be offset by the participation of younger, healthier folks who still need to maintain some kind of health insurance. Alas, not enough of that demographic has been enrolling in the ACA, finding that plans are just too expensive and happy to pay the penalty for going without coverage rather than face an onerous premium payment each month.
High-profile insurers opting to leave the exchanges include UnitedHealthcare and Aetna. The former has said it is losing about $1 billion, overall, on Obamacare for years 2015 and 2016, and Aetna expects to lose about $300 million.
Aetna CEO Mark Bertoini accurately sums up the core problem this way: “Providing affordable, high-quality health care options to consumers is not possible without a balanced risk pool.”
That’s the essence of how insurance works – by pooling risk. The idea is that a large number of individuals each pay a premium into the risk “pool,” but that, at any one time, only a (relatively) small handful of the group will actually make a claim, and some may never make a claim. It is the reliance on these odds that allow insurance companies to do what they do and remain profitable. However, as Aetna CEO Bertoini points out, when the individuals contributing to the pool disproportionately represent those folks certain to not only make claims, but make them repeatedly, then the foundational structure that makes insurance workable is destroyed.
As for the millions who will lose coverage under the ACA in 2017, it’s important to point out that health insurance will remain available for them. However, by being unable to obtain it through the exchanges, many lower- to middle-income families face the prospect of having to pay a lot more for the coverage, because the government subsidies that are a hallmark of Obamacare will not be available for policies purchased outside of it.
By Robert G. Yetman, Jr. Editor At Large