Insurers have been pulling out of Obamacare, and that’s a problem.
How big a problem depends on where you live. In some counties, no insurers may be willing to offer coverage. In others, such as the metro New York City area, competition remains robust. But when you look at the maps of coverage, the pattern is clear: Every year, the areas with deep markets shrink, and those with monopolies, near-monopolies, or no coverage at all grow. And even in relatively healthy exchanges with a fair number of choices, exits mean disruption for customers who may lose access to their current doctors.
States are finding creative ways to keep insurers on the exchanges. So far, two strategies seem to be bearing fruit. The first is to have the state pick up the excess cost for the sickest patients, allowing insurers to keep premiums lower, and perhaps prevent the dreaded “death spiral” where rising costs raise premiums and drive healthy patients out of the market, until all you have left is very sick people and very expensive insurance. Alaska has taken this approach, and it seems to have kept premiums in check, though they’re still very high.
But this approach costs money, and a lot of states are already having budget trouble. So an alternative is to leverage existing spending — for example, by giving preference on Medicaid contracts to insurers that are offering exchange policies. This approach garnered a lot of excitement when Nevada announced it, and New York followed suit. A solution that shored up the exchanges without costing states a penny! What’s not to love?
This week’s news suggests one reason. Aetna announced that it is pulling out of the last Obamacare market where it was considering offering insurance in 2018 — Nevada, where yes, they were applying for a Medicaid managed care contract. When that contract was terminated (apparently for unrelated reasons), so was Aetna’s possibility of selling insurance on that exchange. Nevada has had a challenging time finding insurers to sell in its large rural areas, and this announcement doesn’t help.