If big insurers drop out, who steps in? (Page 77)

Minnesota’s own UnitedHealth just made headlines by announcing that it is dropping out of the pool of private companies that would offer individual policies in California.  Aetna has also dropped out of the California market.  Source: http://www.latimes.com/business/la-fi-unitedhealth-insure-calif-20130702,0,4370321.story

It’s not a tragedy for Californians.  Both of those companies only had a combined 58,000 customers who can now seek new coverage in one of 13 Covered California providers.  What’s apparent, however, is that private companies are dropping out of even lucrative markets such as California where they can’t create policies that keep their costs down and rates up.  It’s the equivalent of taking their ball and going home, which in UnitedHealth’s case is employer-offered plans.

Another company isn’t going home, but they’re not playing either.  Wellmark Blue Cross and Blue Shield of Iowa and South Dakota has elected not to offer its policies on those respective states’ exchanges until the year 2015.  Analysts say the company is worried that the newly insured will be too sick (and therefore too expensive to cover).

The elderly, the self-employed, the-poor-but-not-too-poor, and those with pre-existing conditions may struggle to find insurance they can afford, especially in other states, but why?  The Affordable Care Act was designed to make healthcare coverage available to everyone. Because the Affordable Care Act sets standards that private insurance companies must meet: the coverage must provide value to the consumer; and it must be available to more people with more health issues.  All very noble ideals.

The true irony to these stories is that insurance companies lobbied hard to dictate the terms they had to play under nationwide.  ACA was nearly trampled to death by all the Gucci loafers from “K” street, and now, rather than play by those rules, however, UHC and Aetna decided to leave.

What will happen in states where there are fewer catch-alls, such as Wisconsin?  Look at another state with citizens with health concerns, Mississippi.  Thousands of residents in the Delta-36 of 82 counties-still have no provider that is willing to offer subsidized policies.  That’s more than 50,000 people who can’t find insurance even though they now qualify, according to Kaiser Health News.

Insurance companies are trying all kinds of tactics to keep the cost of healthcare down and profits up, including wellness programs, incentives to lower premiums, and brokering lower rates with hospitals, as Blue Cross and Blue Shield of Minnesota recently announced (and then delayed).  With hospital care being 31 percent of national healthcare costs, expect insurance companies to do more to contain what they pay hospitals.  It will be interesting to see if insurance companies push those hospitals to be more effective, to produce better patient outcomes, to reduce medical mistakes, and maybe even staff more nurses (which we know results in all of the above).

ACA continues to be like that big house we thought about and ultimately decided to buy.  We knew what we were getting from the outside, but there are some cracks we didn’t see on the inside.  In the end, we may be sorry we didn’t wait a little longer and buy that nice single-payer home we really wanted.