The Commonwealth Fund looked at the first year of the implementation of the Affordable Care Act. It found just a third of the 144 insurers participating in the state or federal government exchanges broke even or better.
Ironically, they made twice the income from premiums but the payouts cut profits.
Here are some details from the study:
• Most underestimated total medical costs by at least 5.7%
• 25% underestimated by a whopping 35%
• Losses were recouped in many cases from ObamaCare’s reinsurance program
• With the reinsurance insurers found payouts were just 2% higher than expected
However, the bad news is the reinsurance program ends in 2017. And the researchers recommend — if the Affordable Care Act is to survive — that the reinsurance program needs to be extended until the ObamaCare marketplace has “matured.”
The latest to exit at least part of ObamaCare is Humana. It only operates in a few states but lost close to $1 billion last year. Humana will leave 11 of its 19 marketplaces. With the decision Humana joins UnitedHealth and a couple of others.
Health and Human Services Secretary Sylvia Mathews Burwell said the administration is getting the message. It’s one of the reasons the administration opposes the merger of Humana and Aetna and Anthem and Cigna. Competition makes rates fall and actually — she says — helps insurers. And since insurers are leaving the market, she — and President Obama — are pushing for the creation of a public option.
“When there is competition, that creates downward price pressure, and it also creates upward quality pressure. We’ve always thought and talked about why competition is an important part of the overall picture, and that’s not just in the marketplace but overall for the nation in terms of our health care,” she said.
And what is a public option? It’s a health insurance program where people “buy” health insurance from the government. The premise is that it is not a subsidy and it supports itself. However, some “seed” money will be needed to get the program going.
It was part of the original proposal for ObamaCare but was dropped when Sen. Joe Lieberman — an independent — threatened a filibuster.
Source links: The Hill, Insurance Networking News, Insurance Journal