With top health insurers pulling out of the health exchanges due to heavy losses, Obamacare is under a cloud. According to a CNN report, Aetna will exit from 11 of the 15 states where it offers Obamacare policies, UnitedHealthcare will continue in only three states in 2017, and Humana (HUM) will withdraw from nearly 1,200 counties in eight states. With enrollment for 2017 scheduled to start soon, experts are speculating on the possible implications of these high-profile insurers’ actions on patients and physicians.
The idea behind the state-based exchanges or marketplaces was to make insurers compete directly with each other for patients by offering them comparable insurance coverage. It was expected that this would make the exchanges a reliable source of coverage for millions of people with a larger number of plan choices.
Six years into the passing of the Affordable Care Act (ACA), top insurers are exiting Obamacare and the primary reason is cost. According to McKinsey’s Center for U.S. Health System Reform, insurers’ costs exceeded income by 5% in 2014, and the figure doubled in 2015. Their losses are expected to increase this year too. The reasons for the rising costs are as follows:
- Under health care law, insurers cannot deny coverage for people with pre-existing conditions, and must offer a range of benefits. To balance this, they raised premiums for younger, healthier people, who in turn opted out and chose to pay a fine for not having insurance rather than a premium.
- Enrollment rates of more expensive, traditionally uninsured Americans have increased, resulting in heavy losses for insurers focused on the employer market.
- Insurers have said that they are finding it difficult to fix prices for plans when the government allows people to enroll outside of a specific timeframe.
CNN reports that insurers who offer more restrictive policies targeting lower-income customers who qualify for both premium and out-of-pocket subsidies have performed better on the exchanges. These companies have only a limited network of doctors and hospitals.
Patients will also bear the brunt of the insurer pullout from their state health exchange. They risk losing their preferred doctors and hospitals if they enroll in plans that do not include these providers. Those in rural areas will be affected the most.
Experts have gauged the impact of insurers’ exit from the health exchange on physicians’ practices and hospitals. With less competition, the remaining companies could reduce reimbursements to physicians, according to a recent Pacific Research Institute report. The Department of Justice (DOJ) has blocked previous health plan mergers because of the harm they could cause to physician practices. In any case, these developments indicate that physicians should pay more attention to revenue cycle management.
One of the main concerns raised by insurers is about Obamacare’s risk adjustment program under which customers in good health are made to fund Medicare enrollees diagnosed with chronic costly conditions such as diabetes and HIV. To help Medicare Advantage plan providers meet their responsibilities, physicians’ practices maintain documentation with accurate ICD-10 coding and report claims in a timely manner. RADV audits help carriers determine if the diagnosis codes submitted can be validated by medical record documentation. Insurers now want utilization of expensive specialty drugs to be included in the risk adjustment formula. The Department of Health & Human Services is starting to make changes in this regard with the hope of attracting insurers back into Obamacare.