Why Some Health Insurance Companies are Pulling out of Certain States for Open Enrollment
It’s no secret that the U.S. health care marketplace is experiencing what looks to be the beginning of the end for Obamacare. It seems like every other week a new major health insurer is pulling out of the ACA and leaving those who depend on the ACA for healthcare with little or no choice in their health care coverage. This “dismantling” of Obamacare sadly is being portrayed to some as the inevitable result of a system that doesn’t work. In reality, this model is not being supported the way it was laid out to be, causing it to slowly fall apart.
One of the most stark examples is the state of Iowa. For 2018, Iowa’s ACA (Affordable Care Act) marketplace has but one participant who has yet to pull out. Medica will be the one health plan insurer available for individual coverage. Of course, staying on the market comes with a price, which is the biggest issue among several others that plague the decision for insurers. Premiums are expected to spike 58% in Iowa and with Medica as the sole provider, it appears that price surge is inevitably going to affect those relying on the marketplace for insurance. The engorging out-of-pocket costs correlate directly with the uncertainty around the repeal of ACA cost-sharing reduction payments that were been established with Obamacare.
There is a reason health insurers feel the need to remove themselves from the market - and it makes sense. Health insurers would see notable decreases in revenue to offer plans with the Affordable Care Act’s minimum coverage requirements and keep costs low without help from the government. When that exact assistance is being threatened, as it is being by the Trump administration, insurers have two choices: put the plans on the market and raise premiums for consumers, or they can pull out of the market.
There are more factors as to why this choice to pull out seems to be attractive for insurers and one of them is because in order to actually make money, insurance need to have enough healthy people, with little or no costs on the insurer’s side to balance out all the people who do end up needing medical attention and end up costing insurers more than what they make. Since with the ACA, insurers no longer have the choice to charge a consumer more based on pre-existing conditions, it’s turning out that insurers are being overwhelmed by the cost sharing they are responsible for.
In addition, Insurers seem to be finding that they had set premiums lower than they should have, of course, this was the first time they needed to estimate such costs and they were not sure how many consumers they’d bring in. This kind of uncertainty was was actually anticipated and insures knew there would be a period of readjustment once costs appeared more clear. This specific problem was one that insurers expected so the fact that many of them are now leaving the marketplace shows that it is a major blow to them if they do not receive, or are even threatened to not receive, the government cost- sharing they expected.
Health insurers are trapped between a rock and hard place right now without the support of our government. It’s either they lose revenue by paying their costs without the assistance they anticipated, or they pull out of the market all together. As a business, the latter seems to be the more reasonable option. Unfortunately, it’s those who rely on the marketplace for health insurance who will bear the brunt end of the deal.
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