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Hysteria over Aetna’s partial ACA evacuation needs to be cooled

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Jon Kingsdale argues in Health Affairs that news coverage of Aetna’s plan to exit from 11 of the 15 states where it now offers insurance on Affordable Care Act insurance exchanges, and similar actions by some other big insurers, such as Humana and United Healthcare, has contained much hyperbole and that in fact the exits are no big deal.

He writes:

Critics of the ACA are citing these departures as evidence of the law’s fatally flawed design. Even supporters worry about how to staunch the outflow. And the news reverberated in presidential politics, on both sides. What’s really going on here? Are these big insurers bailing because Obamacare is just too risky? Will more such desertions cripple the marketplaces?”

He answers himself: “Not all health insurance companies are the same, nor do they necessarily serve the same customer segments. In fact, most medical insurance companies, unlike Aetna and United, are regional non-profits, such as the state (or smaller) Blue Cross Blue Shield plans, Kaiser Permanente and HIP. These ‘regional’ plans and Medicaid managed care organizations (MCOs) are generally better positioned to compete on the new marketplaces than ‘national’ insurers.”

“By contrast, national firms such as Aetna, United and CIGNA are far better positioned to serve national employers and other large, self-insured groups than to compete for individual households.”

“The vast majority of purchasers on the ACA marketplace are low-to-moderate income households, who are searching for low-priced health plans. As extremely ‘price-sensitive’ buyers, most seem willing to trade access to a broader network in return for lower premiums. Regional health plans and Medicaid MCOs are generally more successful than national ones in negotiating the lowest payment rates with local doctors and hospitals. As a result, the Blue Cross Blue Shield and other regional plans generally—not always—enjoy a cost and premium advantage over national plans and tend to dominate their marketplaces.”

“In fact, United and Aetna, despite their deep penetration of the large-group insurance market, together serve only 15 percent of marketplace enrollees, and their retrenchment will impact only about 10 percent.

“They are leaving many marketplaces, but staying in those where they think they can compete. This is clearly not the same as rejecting ACA marketplaces wholesale because of some fundamental flaw in the law. Presumably, they are being selective about their participation as they see how price-disciplined the marketplaces are and where they enjoy a competitive advantage.”

To read Mr. Kingsdale’s Health Affairs article, please hit this link.

 

 


Replacing ACA tax credits seen hurting poor

 

The Commonwealth Fund has been looking at some Republican suggestions to replace the Affordable Care Act. For instance, the fund notes, tax credits for  buying health insurance in the ACA marketplaces are designed to limit enrollees’ premium contributions to a percentage of their income.  Critics have pushed the idea of replacing those contributions with  “premium support” to give enrollees a fixed subsidy amount—regardless of their premium costs.

In a new analysis for The Commonwealth Fund Blog, Evan Saltzman, of the University of Pennsylvania’s Wharton School, and Christine Eibner, of RAND,  say that premium-support models could place financial burdens on low-income and older individuals.

 

 


How ACA could improve U.S. economy

David Squires and David Blumenthal, M.D., argue that the Affordable Care Act could significantly improve U.S. economic strength because:

*“The ACA could significantly improve the U.S. workforce’s overall health. Insurance expansions have been shown to improve beneficiaries’ health and raise their future earnings. ”

* “Taming our nation’s astronomical health care bill would further improve our ability to compete in foreign markets. We spend more on health care than any other wealthy country—health spending represents nearly one-fifth of the U.S. economy, compared with one-tenth in the average industrialized nation. This leaves fewer resources available for research, infrastructure, education, and other investments that are foundational to economic competitiveness.”

* “ACA marketplaces created a functional health insurance market for people buying health insurance on their own, weakening the link between employment and coverage. This promotes entrepreneurship, by allowing workers to leave jobs and start their own businesses without losing their insurance. ”

 


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