Single-Rural Heath Care: Obamacare Insurers Retreat, Leaving Only One ACA Insurer In Some Areas

Matt Vespa
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Posted: May 18, 2016 2:05 PM
Single-Rural Heath Care: Obamacare Insurers Retreat, Leaving Only One ACA Insurer In Some Areas

Obamacare has been disastrous for health insurers, like UnitedHealth Group, billions have been wasted on state exchanges, which are hanging by a thread, and the law’s enrollment projections (calculated by the CBO three years ago) were off by 24 million for 2016. Now, more Americans are opting to pay the penalty and remain uninsured because it makes more sense for their finances. No wonder why this law is unpopular. Oh, and did I mention that premiums are projected to rise (again) this year. Given the expensive nature of the Obamacare market, some insurers are dropping like flies, giving Americans in some rural areas just one choice when it comes to their health care. Of course, some folks are worried about monopoly dynamics (via WSJ):

Health-insurance customers in a growing number of mostly rural regions will have just one insurer’s plans to choose from on the Affordable Care Act’s exchanges next year, as some companies pull out of unprofitable markets.

The entire states of Alaska and Alabama are expected to have only one insurer on the health law’s signature online marketplaces next year, according to state regulators. The same is expected to be true in parts of several other states, including Kentucky, Tennessee, Mississippi, Arizona and Oklahoma, state regulators said.

So far, more than 650 counties appear on track to have just one insurer on the exchanges in 2017, according to the Kaiser Family Foundation, which is tracking withdrawals as they become public. That would be up from 225 in 2016, when the state of Wyoming, among other areas, already had just one ACA marketplace competitor. Of the counties in jeopardy of having only a single exchange insurer next year, 70% have populations that are mostly rural, said Cynthia Cox, a researcher at the foundation.

[…]

Kori Allen, a bookkeeper in Kodiak, Alaska, this year has an exchange plan from Moda Health Plan Inc., which will pull out of the state’s ACA marketplace next year. Ms. Allen, 36 years old, who receives a federal subsidy that helps with her premiums, worries about what will happen when there is only one insurer, Premera Blue Cross, offering exchange products: “It’s going to be a monopoly, basically; ‘here’s the price, take it or leave it.’”

[…]

…the patchwork of coverage reflects continued instability in the individual insurance market, as companies shift their geographic footprints to avoid areas that have turned out to generate steep losses, and focus on places where they believe they can get their ACA business into the black.

UnitedHealth Group Inc. said last month it would leave all but a handful of the 34 states where it sold exchange plans this year amid losses; Humana Inc. is also pulling out of some areas. Others are sticking around: Anthem Inc. has said it would continue selling exchange plans in its current 14 states. Aetna Inc. will remain in its 15 states and has said it may enter more, and Cigna Corp. plans to extend beyond the seven states where it currently sells exchange plans.

How expensive is the ACA market? In North Carolina, Blue Cross and Blue Shield is the only insurer under Obamacare that offers health insurance to all of the states 100 counties. In 2014, CEO Brad Wilson said [emphasis mine]:

“In year one, five percent of our ACA customers consumed $830 million in health care costs. That’s how much money went out of our door to pay for the heath care for the sickest five percent of the ACA population that we had; we collected $75 million in premiums–between what they could contribute and the government subsidy. Any way you cut it that’s an unsustainable business model.”

Moreover, Ali Meyer of the Washington Free Beacon reported that there’s been a 27 percent decrease in participation among health insurers in the exchanges since the law went into effect.

Still, liberals are going to tout how Obamacare has given us a record low rate of uninsured Americans, but costs have not gone down. That was the main selling point for Obamacare in 2009-10. This could be due to the fact that pro-Obamacare proponents overlook the fact that most newly insured persons have been tossed onto the Medicaid rolls (via Weekly Standard/Hudson Institute):

Obamacare's proponents say the overhaul has greatly increased the number of people with health insurance coverage (albeit by less than three-quarters as much as it was supposed to have done by this time). What they tend to omit is the fact that most of the "newly insured"—about 60 percent—have merely been dumped into Medicaid. According to the Congressional Budget Office, Obamacare has added only 8 million people—just 2.5 percent of the U.S. population—to the private insurance rolls.

And at what cost? Well, the CBO says that the Obamacare subsidies for private insurance will cost $43 billion this year alone. That's an average of $5,375 per person for those who have been added to the private insurance rolls—or $21,500 per family of four. Meanwhile, the typical 36-year-old (or younger) who makes $36,000 a year (or more) gets $0 under Obamacare. Such everyday Americans instead get to help finance that $5,375-per-person cost for those who get private insurance under Obamacare, while facing far higher premiums and significantly narrower doctor networks themselves.

As for those who Obamacare has newly enrolled in Medicaid, they are costing taxpayers even more—an average of $5,692 per person for this year alone ($74 billion divided by 13 million new enrollees).

The overwhelming majority of Americans had health insurance, through private plans, but mostly through their employers. This was never a major problem. And most of those who had insurance prior to Obamacare axing them from it liked their plans. Now, it’s cheaper to just pay the penalty and remain uninsured.