August 19, 2016 (San Diego) AETNA, one of the largest medical insurance companies, is going to withdraw from most state exchanges. One reason given by the company, they are losing money since the pool is sicker and they do not want to continue paying for sick people. There are two points that are critical on this. The first is that as Huffington discovered, the real reason is they were blocked from joining Humana. This might sound as a petty move, and it is, but it reveals the power of the insurance industry.
The second point is that AETNA leaving might put the whole system under real pressure of failing. This is one of the criticisms that people raised even before the Affordable Care Act was signed. It was giving too much power to an industry that only cares about stock holders, not because they are evil, they are legally required to do so. So what AETNA is dong is being responsible to the stock owners.
What they are not leaving behind though is the rather profitable Medicaid market. This was reported by the Charlotte Observer, that also quipped about the nature of the beast. Perhaps Medicaid should be directly tied to the ACA. The Observer writes:
Aetna regretted its decision, said CEO Mark Bertolini in the statement, but doing business in the Obamacare marketplaces created “significant sustainability concerns.”
It’s the same complaint other insurers have voiced about Obamacare, and it mirrors what Bertolini said just two weeks ago in a second-quarter earnings call. But earlier this year, Bertolini let slip another figure that didn’t make it into Monday’s six paragraphs: Aetna enjoyed a record $6.5 billion in government program premiums in the first quarter.
In other words, doing business with the government isn’t so bad after all. In fact, it’s gotten especially good since Obamacare came along, thanks largely to the Affordable Care Act’s expansion of Medicaid in most states (but not yet North Carolina.) Medicaid, like Medicare, offers the best of most worlds for insurers – it’s single-payer, government-financed insurance, and it has low enrollee costs. So while insurers like to gripe about the individual Obamacare exchanges, they have no issues with the big Medicaid profits that Obamacare helps provide.
We suspect that their decision had a lot more to do with the merger, but it points to structural issues. US News and World Report wrote this in 2015. People who get insured though the exchanges might have issues getting providers.
Doctors or hospitals may be left out of insurance networks for many reasons; the decision is usually up to the insurance company, not the provider, but it usually comes down to reimbursement, which can be lower through plans obtained via the Obamacare marketplace.
”We have no idea what the plans are paying,” says David Howard, professor in the department of health policy and management at Emory University. “That’s closely guarded information. We can only draw conclusions based on anecdotal reports.”
These issues were raised by critics of the plan before it even became law. It also was raised by those who have worked for single payer for decades, without any response. Now the Administration is hinting that they might create some medicare type programs, but unless this is universal, not only will the system continue to shatter, but ultimately it will fail.
Another thing that the US News and World Report pointed to a reason why doctors do not want to work with the market places, is precisely one reason we have heard as well. The administrative burden is such that it makes it less than attractive for physicians, especially those late in their career.
The US Medical system is resisting going to a universal health care. Why? It takes away profits and that makes the system public. The way the ACA was designed it is already showing the fault lines that critics said it would. Senator Bernie Sanders (VT-I_) _said that this was evidence that we indeed need Medicare for All. The ACA has lowered costs short term, and increased insurance rates, but in the long term it might fail due to a concerted effort by an industry that has been resisting any reforms for decades.