Health Insurers’ Collapsing Obamacare Consensus

Marilyn Tavenner, CEO of AHIP

M. Tavenner, CEO of AHIP

The health insurance industry is undergoing a crisis of consensus on how to respond to the failure of Obamacare. That is the only way to interpret the departure of another large, national carrier, Aetna, from America’s Health Insurance Plans (AHIP). This follows UnitedHealth Group’s departure from the industry’s trade group last June:

Those misgivings manifested most recently during the debate over ObamaCare when the so-called “big five” — UnitedHealthcare, Anthem, Aetna, Humana and Cigna — formed their own informal coalition.

Another healthcare executive, who asked for anonymity in order to speak freely, said that, for some, “there’s a sense that AHIP has become a one-trick pony for the Obama administration,” referring to the goal of advancing ObamaCare.

With the country’s first- and third-largest health insurers gone from its ranks, the insurance group could see problems arise from the divisions between large and small companies.

(Peter Sullivan & Megan R. Wilson, “Aetna departure a major blow for insurers group,” The Hill, January 5, 2016).

Insurers are losing money in Obamacare’s exchanges. The Republican-majority Congress has refused to bail them out of their Obamacare losses. On the other hand, they clearly have influence in the Congress, because a bipartisan majority gave the industry one-year relief from its Obamacare excise tax (which is passed on to consumers and employers anyway) last December.

Congress has just passed a partial repeal of Obamacare, which will be vetoed by the President. How seriously we should take this gesture is to be determined by future events, especially if a Republican president is elected who would sign the bill.

Given these circumstances, it is not surprising the health insurers are in disarray: Will some dig their heels in to defend Obamacare; while some finally accept it needs to be repealed and replaced? How this powerful lobbying force divides will be critical in determining the future of health reform.


Comments (5)

Trackback URL | Comments RSS Feed

  1. Jay Seo says:

    The exchange book of business still runs far better than the retail book at my company (BCBSTX). These books are bad for the same reason COBRA claims are bad. Without contributions, medical premiums are not an affordable product for anyone who isn’t going to utilize the crap out of it. The individual mandate provided an optimism for the carriers, suggesting a spread of risk in addition to subsidies to help scale the enrollment and penetrate new markets. Some (many Blue plans for instance,) over leveraged and are rethinking their strategies. My point: these are the same legislative bodies that have made insurance carriers immensely profitable and prudent to a point other financial entities could even dream about. Your government book of business is bad? Tough crap, mention it during bed time.

    • BCBSTX had one of the biggest Obamacare premium hikes, almost 20 percent, this year, right? So if that is doing better than the non-exchange individual market, I would hate to see that book!

      • Jay Seo says:

        Care management (or lack thereof) is what is being blamed. Much talk about walk-in clinics @ the corner of every suburban intersection who tell the patron, “Yes we ACCEPT Blue…” However as you well know, in-network guarantees and discounts are the industry’s prime levers. For one reason or another (I’m sure we could go on and on), the policy holders in the individual market are particularly vast roamers; receiving care out-of-network like a minor league center fielder in Florida. So much so as you can read in the linked post, the plan said the heck with a PPO; our provider preference is inconsequential to/neglected by this market and it’s not worth maintaining a network at this point. So yes John, the non-exchange individual market is a pool you don’t want to swim in. Unless you’re in a space suit or something.

  2. Bob Hertz says:

    thanks Jay.

    Does your term ‘retail book’ refer to the individual market outside the exchanges?

    and does your term ‘contributions’ refer to employer paid premiums?

    If so, I agree with you.

    I would be curious to know what you think will happen to the exchanges if no large insurer wants any part of them?

    • Jay Seo says:

      You are welcome Bob,

      Yes exactly, the non-exchange 365 day enrollment individual retail market.

      Also yes, employer contribution to a group plan (untaxed income for the employees as this blog often points out)

      WRT to the prospect of large carriers completely dropping ACA-exchange business, I can’t imagine that level of hardball in Washington. There are backs to be scratched and if ACA fails it will be at the hands of politicians rather than carriers IMO.

      To entertain the thought, that would make the plans the most terrible product in a shelf of terrible products; effectively completing the eat-own-tail cycle of all this legislation back to Medicaid-but-not-really-sorta.