Earlier this week, Aetna’s CEO admitted something most of us knew long ago: Obamacare Markets are in a ‘Death Spiral’.

death-care-spiral

Obamacare is in a “death spiral,” the influential CEO of Aetna, Mark Bertolini, declared Wednesday morning.

Bertolini’s doomsday prophesy: More insurers will pull out of the government-run marketplaces in the coming weeks and many areas will have no insurers to provide Affordable Care Act coverage in 2018.

“It’s not going to get any better; it’s getting worse,” Bertolini said in an interview at a Wall Street Journal event.
But he declined to say whether Aetna would completely pull out of Obamacare markets next year, though he said the population of covered people in the marketplaces has skewed older and sicker than expected.

Bertolini’s broadside came just moments before the Trump administration released a proposed rule designed to make changes to Obamacare regulations that are designed to temporarily stabilize the law’s insurance marketplaces as Republicans pull together a replacement plan. The proposal outlines several policies sought by health insurers that would shore up the market until Congress settles on an Obamacare repeal plan and possibly a replacement

Humana, which had already significantly limited its exchange footprint this year, announced Tuesday that it would completely pull out of the exchange markets next year after determining its customer base would still be unprofitable. That followed major pullbacks this year from other national insurers, including Aetna and UnitedHealth Group.

Caroline Pearson, a senior vice president with consulting firm Avalere Health, downplayed the significance of the moves by Aetna and Humana. She pointed out that Blue Cross Blue Shield plans are the dominant players in most markets and that their continued participation will be critical.

Trump Changes to Obamacare Could Cost Consumers

CNN Money reports Trump starts making changes to Obamacare that could cost consumers

The Trump administration is taking its first steps to overhaul Obamacare. It issued a proposed rule Wednesday aimed mainly at quelling insurers’ concerns and stabilizing the marketplace for 2018. But it is also likely to raise deductibles and out-of-pocket costs for many consumers.

While President Trump wants Congress to repeal the Affordable Care Act as quickly as possible, his hands are tied by two important factors: He has promised to have an orderly transition out of Obamacare, so people don’t lose their coverage, and he must defer to Congress to actually change the law.

Here’s what the proposed rule would do:

Raise costs for consumers: Insurers would gain greater flexibility in how much their policies would pay in each tier of coverage. For instance, silver plans currently must cover 70% of out-of-pocket costs, on average. Giving insurers more latitude would allow them to offer a wider range of products with higher deductibles and co-pays. This would likely lower premiums — a plus, especially for middle class Americans who don’t qualify for Obamacare subsidies — but it would mean enrollees have to pay more to get care, which is already one of the chief complaints about the law.

The changes would also eliminate the federal government’s review of whether insurers have enough doctors and hospitals in their networks. The Obama administration added this oversight after enrollees complained there were too few providers who accepted their plans.

“It’s certainly not going to help consumers,” said Tim Jost, a health law professor at Washington and Lee University School of Law.

Tighter enrollment periods: The new rule would cut the open enrollment period for 2018 in half, so that Americans could only sign up between November 1 and December 15. This would bring it more in line with signing up for on-the-job coverage and would ensure most Obamacare enrollees would have coverage all year long because coverage would start January 1.

It would require those applying outside of open enrollment to provide documentation proving their eligibility before coverage kicks in. Insurers have long requested a tightening of the special enrollment periods, which allow people who’ve experienced major life changes — such as job loss, divorce or the birth of a baby — to sign up during the year. Carriers argue that people are gaming the system and enrolling only when they get sick, but consumer advocates say this proposed requirement will make it harder for those truly eligible to qualify.

Overall, the changes could wind up driving more people — particularly younger folks with fewer medical issues — out of the exchanges, said Sabrina Corlette, a research professor at Georgetown’s Center on Health Insurance Reforms.

Enrollment in Obamacare is already lagging. Only 9.2 million people signed up for 2017 coverage through the federal exchange, healthcare.gov, down from 9.6 million a year ago.

“There’s nothing in this rule that encourages healthy people to sign up … and it’s the healthy people you need in order to stabilize the market,” she said.

Death Spiral DebateLast Man Standing

Do you have any competition when there is only one major player left?

  1. November 1, 2016: Obamacare “Near Collapse” in Minnesota as Prices Jump 60% Average
  2. October 20, 2016: Obamacare Premiums Up 30% in TX, MS, KS; 50% in IL, AZ, PA; 93% in NM: When Does the Death Spiral Blow Up?
  3. May 17, 2016: As Insurance Losses Mount So Do Refusals: “Sorry, We Don’t Take Obamacare”
  4. April 20, 2016: United Health Will Dump Obamacare Offerings in 29 of 34 States: Death of Obamacare?
  5. April 15, 2016: Obamacare Death Spiral: Insurers to Drop Plans Unless Premiums Rocket, “Something’s Got to Give”

Can Trump Fix This Mess?

I fail to see how any of Trump’s proposals do anything but nibble at the edges of major problems.

There is nothing in the Obamacare exchanges that encourages young, healthy people to enroll. And why should the young and healthy enroll given they have to overpay for the privilege?

That is one of the two major problems. The more fundamental problem is there is nothing in the system, at any level, that forces or encourages competition.

Obamacare mandated nearly everything under the sun with a ridiculous bundle of metallic names “gold, silver, platinum, bronze” telling insurers what they had to cover and what types of plans they had to offer.

Mish Healthcare Proposals

The fundamental problem that Trump did not address, is nothing in Obamacare encourages anyone to shop around for anything. Operations that cost $100,000 in the US might cost $2,000 elsewhere.

  1. Why not allow plans that force patients to travel if they are healthy enough to do so?
  2. Why not allow drug imports?
  3. Why not insurance across state borders?

I covered those questions and much more in Rand Paul’s “Obamacare Replacement Act” vs. Mish Health Care Proposals.

President Trump and Rand Paul are nibbling at the edges. We need serious reforms.If you like my suggestions, please contact your representatives and ask for them.

Click here to Find Your Representative. You may also wish to try Contacting Congress.

If you have ideas, please let them be known.

Mike “Mish” Shedlock