Major Insurers Bail on the ACA—Limited Choices and Patient Struggles Ahead

(This blog was originally published on September 5, 2016 on Bold.Global)

In the last several months three major players in the Obamacare exchanges have publicly  reported millions of dollars in losses and have made plans to either pull out completely (or significantly decrease participation) in the ACA insurance exchanges. Humana, United and Aetna account for the majority of the policies written under the affordable care act and will no longer be participating in open enrollment in 2017. All three insurers have cited overwhelming losses and a responsibility to their shareholders at the motivation for the change. The mass exodus of larger insurers has created a situation where nearly 1/3 of the individual counties in the United States will have only ONE choice in the exchange—effectively creating monopolies for these insurers. The insurers that remain are already asking for substantial premium increases—in some areas premiums may rise nearly 40%. In an effort to cut costs even further, those insurers that remain are negotiating contracts with healthcare systems that will accept rock bottom reimbursements. Many major healthcare systems are not able to participate in the exchanges. This has left many Obamacare participants with very narrow “in network” choices and some areas are faced with only ONE healthcare system and its affiliated physicians.   By limiting the network choices, the insurers are able to better control costs due to the fact that more expensive physicians and hospitals can be left out. When an insurer contracts with a particular hospital system and affiliated physicians, they are able to require referrals for specialists and the often offer incentives to primary care doctors for limiting costs (with no measure of quality).

What is the obvious Fallout from NO competition??

  1. Diminished Choice

As mentioned above, the remaining insurers must cut costs. The ACA exchanges have been flooded with older, sicker patients that require more care and create a higher cost burden. In order to manage these costs, insurers are negotiating contracts with single healthcare organizations in an effort to limit costs. These contracts will eliminate choice for most of those insured through the ACA. There is a shift towards HMO style plans and there are now fewer PPO (Preferred Provider Organization) options. PPOs allow patients to make choices in providers and HMOs typically have far fewer choices. In many states, there are no PPO choices—overall 15% of customers will have NO PPO to choose from. As you may expect, the profit margins for HMOs tend to be much higher for the insurers.   In 2016, HMOs represented 65% of all ACA plan choices. Non HMO plans tend to have higher premiums and are subject to more frequent and more significant premium increases as these insurers accumulate sicker, more expensive customers.

  1. Less Quality

Whenever there is a lack of competition, quality tends to suffer—no matter what the industry—and Medicine is not immune. Cost cutting measures and incentives for physicians to “do less” can result in a lower quality of care. For the most part, insurance companies are not concerned with the health of the insured—they are focused on the cost and the risk. In an ideal world, medicine would focus on prevention rather than treatment. However, many insurers do not cover important preventative tests and prescription drugs that are designed to modify risk.

  1. Increased Cost

Insurance companies are “for profit” businesses with shareholders to which they must answer. The job of the insurance executives is to maximize profits and minimize risk—Do not be fooled, insurance companies do not care about the well being of their customers. When insurance companies such as those who are taking losses in the exchanges find that their bottom line is negatively affected, they quickly raise rates, increase co-pays and raise deductibles.

  1. Less Access

As insurers limit their networks, patients will find that they have less access. When exchanges only offer one choice of hospital system and affiliated physician groups, patients will have difficulty finding a primary care doctor or may experience waiting lists to see specialists. Ultimately, patients will be separated from their long time physicians (unless they are lucky enough to find that they remain in network). Many physicians will ultimately retire or choose not to participate in the exchanges due to lower reimbursement rates—in some cases the exchanges reimburse at rates lower than Medicare and Medicaid—which are already 30% lower than private insurance rates. Major academic medical centers—such as UCLA and Northwestern for example—and countless others, are not participating in the exchanges due to reimbursement concerns. Academic centers often have cutting edge therapies and experimental protocols for cancer and other devastating diseases. Because of network and cost containment issues, those insured by the ACA will not have access to this type of care.

WHAT needs to be done?

It is clear that the ACA is NOT working. While we have millions of newly insured Americans, many of these newly insured remain effectively “uninsured” due to the inability to meet deductibles, and the limited access to care. It is vital that we insure all Americans—but we must do so in a way that preserves patient choice and helps improve quality of care—all while being fiscally responsible. We must work to better regulate insurers and make sure that the focus of care pivots to PREVENTION in the next decade. Physicians should be measured on how well they PREVENT disease as well as how well they TREAT disease with the highest quality care. We must also require individual accountability for patients. Those that make healthy lifestyle choices should be rewarded with lower premiums. Those that choose to continue high risk behaviors—smoking, poor diet, etc—should pay more.

Ultimately, Congress will have a choice in 2017. They can either bail out a broken ACA by pouring more good money after bad—OR—they can actually legislate and reform the law, making it more effective for all parties—insurers, patients and physicians.

 

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