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.
“They are no longer major participants in the market,” Pearson said of Aetna and Humana. “This is sort of a continuation of their previous strategy and not that surprising.”
The administration’s move to stabilize the marketplace drew praise from America’s Health Insurance Plans, the leading industry group.
“We support solutions that address key challenges in the individual market, promote affordability for consumers, and give states and the private sector additional flexibility to meet the needs of consumers,” said AHIP CEO Marilyn Tavenner in a statement. “We appreciate the Administration’s efforts in proposing policies intended to address stability, affordability, and choice, helping consumers get the coverage they need.”
But insurers believe more steps are needed before they can commit to competing in the Obamacare markets next year. The biggest question: What’s going to happen to the subsidies that more than eight in ten Obamacare customers rely on to afford coverage? The timeline is tight for clarity. Health plans will begin filing products for consideration by state regulators in April.
“Nonprofit community plans are in a real time crunch,” said Ceci Connolly, CEO of the Alliance of Community Health Plans. “They will be making very difficult decisions in March and they’re getting anxious about the uncertainty.”
Connolly said her members don’t agree with Bertolini’s belief that the markets are already in a death spiral.
“We’re concerned by any rhetoric that adds confusion to the existing uncertainty,” she said. “What we would like is to have a fact-based conversation about the future of the individual market.”
Pearson doesn’t think the proposed marketplace stabilization rule alone will fundamentally alter how health plans approach the markets for 2018.
“It’s not clear to me that that rule does enough to change health plan decision-making about whether to stay in the market,” Pearson said. “I don’t know that it’s going to keep insurers in if they were otherwise inclined to exit.”
Aetna’s $37 billion acquisition of Humana was blocked last month by a federal judge, in part because it would have limited competition in the Obamacare marketplaces. In particular, the judge ruled that Aetna had pulled out of 17 state exchange markets in order to avoid judicial scrutiny of the deal. The companies Tuesday mutually announced that they would walk away from the deal instead of fighting an uphill battle to overturn the ruling on appeal and preserve the deal.
During Wednesday’s talk, Bertolini embraced a couple of ideas that are part of many GOP blueprints for replacing Obamacare — though the GOP is for the moment stuck on which of those plans to embrace and whether to link repeal and replacement. Bertolini backed catastrophic-coverage plans linked to health savings accounts in order to entice more young, healthy customers into the marketplaces.
He also called for a pool of money to subsidize insurers who attract particularly sick, expensive customers. Obamacare included such a reinsurance fund, but it expired after three years. And Republicans in Congress blocked some other steps Obamacare had originally included to help insurers through the first uncertain years.
“The repeal is easy. They can do that tomorrow if they want to,” Bertolini said. “The question is what does the replacement look like and how long does it take to get there.”