(Daily Caller News Foundation) Major insurance providers are opting out of the Obamacare marketplace and profiting as a result.
Three of the most prominent insurers on the Obamacare exchanges are either ditching Obamacare entirely or are significantly scaling back their involvement in 2018. The resulting profits do not bode well for the future of former President Barack Obama’s landmark legislative achievement. The system is causing providers to hemorrhage money and is crushing consumers with backbreaking premium increases.
UnitedHealth was the first health insurance company to expose the most significant problem with the legislation — offering plans on Obamacare exchanges is a money-losing, profit sucking proposition.
In April 2016, the company announced a 765,000 reduction in the number of Obamacare exchange policies it planned to offer in 2017, citing massive profit losses of $475 million in 2015 and expected losses over $600 million for 2016.
“The smaller overall market size and shorter term, higher-risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustained basis,” UnitedHealth Chief Executive Officer Stephen Hemsley told reporters in April 2016. “Next year, we will remain in only a handful of states, and we will not carry financial exposure from exchanges into 2017.”
The company reduced its exposure on the exchanges significantly, cutting its participation from 34 states in 2016 to just three in 2017 — Virginia, Nevada and New York. It plans to drop Obamacare plans in Virginia in 2018.
UnitedHealth’s decision to largely remove itself from Obamacare is proving lucrative, propelling the company towards double-digit percentage profit growth in the first-quarter of 2017. First-quarter 2017 earnings from operations and revenues were up 15 and 11.8 percent respectively from the first-quarter of 2016 — the same quarter the company announced its massive reduction in Obamacare plans.
Other insurance companies are taking notice of UnitedHealth’s success. Health insurance providers Aetna and Humana are pushing one step further, completely opting out of Obamacare altogether in 2018.
Aetna pulled out of 11 exchanges in 2017, offering plans in only 4 states: Delaware, Iowa, Virginia and Nebraska. The company announced May 10 that it would stop offering Obamacare exchange plans in 2018, citing massive losses among exchange participants and projecting the problems to worsen over the short term.
Aetna’s decision to opt out of Obamacare came barely one week after reporting an adjusted quarterly profit well above initial expectations on May 2. The company attributed their recent success to exiting the Obamacare marketplace.
The major insurance provider earned $2.71 a share, smoking analysts’ initial estimates of around $2.37 a share, according to its first-quarter results. Aetna also reported an adjusted revenue of $15.49 billion, beating initial predictions of $15.44 billion.
“This strong start to the year has enabled Aetna to absorb continued pressure from our individual commercial products,” Aetna Chief Executive Mark Bertolini said in a statement.
Humana announced in February that it would pull out of all Obamacare exchanges in 2018. It was the first major insurance provider to opt out of Obamacare entirely under President Donald Trump.
The company said it tried to provide plans on exchanges for years where it could offer a “viable product.” Its decision to stop offering plans on the exchanges came after “seeing signs of an unbalanced risk pool based on the results of the 2017 open enrollment period, therefore we’ve decided that we can’t continue to offer this coverage in 2018,” Bruce Broussard, chief executive of Humana, said in a statement.
Humana has yet to see any tangible results from its exit, as it only announced the company was opting out in February. Both UnitedHealth and Aetna withdrew from some state exchanges in 2017, allowing them to have hard data to evaluate their decisions.
Insurance providers exiting the marketplace is not the only bad news for Obamacare. Consumers still reliant on state exchanges for health insurance are getting hit with higher costs every year in the form of rising premiums.
Insurers pull out of marketplaces where it is not cost-efficient for them to provide services, and as a result, consumers are left with fewer options at higher prices. Average premiums for a family of four topped $18,000 in 2016.
Obamacare introduced new regulations into the health care marketplace that contributed to premiums doubling after the legislation took full effect in 2014, according to a report the Department of Health and Human Services (HHS) released May 23.
HHS compared premiums in the exchange marketplaces in 2013, one year before Obamacare regulations took full effect, to premiums in the exchange marketplace in 2017. The report found that average monthly premiums increased from $224 in 2013 to $476 in 2014. That constitutes a 105 percent increase in only four years.
While skyrocketing premiums are a problem in state exchanges, some cities are fairing even worse, seeing the near, or complete, collapse of Obamacare.
Blue Cross Blue Shield of Kansas City announced May 24 it will no longer offer or renew insurance plans on the city’s Obamacare exchange next year in Kansas or Missouri.
The fallout is likely to affect some 67,000 Blue Cross customers in 30 counties in Kansas City, according to a statement from Blue Cross Blue Shield of Kansas City. Some 25 counties in western Missouri could be left without a single insurance provider on the Obamacare exchanges unless another provider steps in to fill the place of Blue Cross Blue Shield.
While Kansas City is concerning, Knoxville, Tenn., could be the first city in the U.S. where Obamacare completely collapses, leaving tens of thousands of people without the option to buy a subsidized insurance policy.
With Humana, the city’s only remaining insurance provider on its Obamacare exchange, exiting the Obamacare marketplace entirely in 2018, Knoxville citizens will be in a rough spot. Unless another insurance provider fills Humana’s place, 40,000 people in the Knoxville area will likely be left without the option to purchase an Obamacare-subsidized insurance policy.
The reality of Obamacare — higher premiums, costs and fewer insurance options for consumers — does not bode well for the future of progressive health care.
Republished with permission from Daily Caller News Foundation via iCopyright license.