By Steven Buttice, Founder and President, Living By Your Design, Inc.
On November 19, 2015, United Health Care, the nation’s largest health insurer, warned that it might pull out of the ObamaCare exchanges for 2017. This move would force more than half a million people to find other coverage. The cause: low enrollment and high usage has cost the company millions of dollars.
More than half of the nonprofit insurance cooperatives also departed from the exchanges in 2015. Like United Health Group, Fortune states that they left due to higher-than-anticipated costs and lower claims reimbursements, known as risk corridors. The magazine also reveals that there are six percent fewer insurance companies offering coverage on the ObamaCare exchanges for 2016 than 2015. This development raises new questions about the viability of President Obama’s signature health law.
Per the Centers of Medicare & Medicaid: Section 1342 of the Affordable Care Act directs Health & Human Services to establish a temporary risk corridor program during the years 2014 through 2016. Risk corridors apply to qualified health plans in the individual and small group markets. The purpose is to protect against inaccurate rate-setting by sharing risk (gains and losses) on allowable costs between HHS and qualified health plans to help ensure stable health insurance premiums.
In an attempt to better control costs and enrollment, many health insurance carriers are no longer marketing ACA plans. In fact, Humana, Aetna, Coventry, Blue Cross of Illinois, and United Health Care have, at least temporarily, stopped paying ACA-certified insurance agents commissions on new enrollments.
Considering the failure of over half of the insurance cooperatives, 50 fewer companies offering ACA health insurance plans, and insurance companies discontinuing payments to agents for their help, the viability of ObamaCare may be in question.
Many people are talking about the premium increases. The reason for this situation is complicated. Until 2016, the number of young healthy people was not as high as originally projected.
People can only buy ACA health plans during the November 1 to January 31 open enrollment period, except for during “special enrollment periods” for defined life changes. However, these SEPs have been easy to manipulate and abuse. One major ACA carrier states that 40 percent of all claims come from people enrolling during SEPs. The average length of time the insured keep and pay for these plans is only four months, indicating potential abuse of the system. Because of this situation, in 2016, ACA is requiring a greater level of proof of SEP events.
The manipulation of SEPs is important, as some people are only enrolling in ACA after they have or suspect they have a major medical condition, such as Hepatitis C. It has been speculated that people have made up an SEP, enrolled in coverage, received treatment for three months and about $75,000 in medications, and then quit paying premiums for the plan.
The bottom line: in February, Bloomberg News reported that Aetna CEO Mark Bertolini said he has “serious concerns” about whether the ACA health insurance exchanges are sustainable, echoing remarks from other top insurers.
ACA brought forward a number of needed changes. However, there is concern about the continued viability of the current format. There are also two more elephants in the room: tax credits/subsidies and Medicaid. We will provide more information on these issues in a later article.
For more information, contact Living By Your Design, Inc. We focus on the issues of the elderly: legal, financial, free guidance for residential placement, and healthcare issues. Call: 309-285-8088. Website: www.LivingByYourDesignInc.com. Location: 809 W. Detweiller Dr., Peoria.