by Katherine Restrepo
Director of Health Care Policy, John Locke Foundation
Starting in 2017, 94 percent of North Carolina counties will have just one insurance carrier selling individual health plans through Obamacare’s health insurance marketplace – commonly known as the “Exchange”. In those 94 counties, people renewing their Exchange plans or enrolling for the first time will have no choice but to pay their premiums to Blue Cross and Blue Shield. Although Cigna has decided to enter into North Carolina’s Exchange, the company plans to establish a market presence in just six counties within the Research Triangle Region. Since Blue Cross will continue offering non-group policies in all 100 counties across the state, residents in this area will at least have two options.
The pickings aren’t slim in just North Carolina. For anyone who is following the unraveling of Obamacare, its a national issue.
When the federal health law’s Exchange provisions went live in January 2014, North Carolina started with three carriers brave enough to enter into uncharted territory. For the first time, they were required to accept every applicant in the non-group market, regardless of health status. They also agreed to be subject to limitations on pricing premiums based on policyholders’ actual risk. As predicted by many experts in the field, the deadly combination of the federal government having a larger hand in insurance regulations combined with a weak individual mandate has produced all sorts of unintended consequences. Not enough low-risk people are signing up for health plans in the individual market (just 27% of enrollees in North Carolina are between ages 18-34), claims costs are outweighing premium revenues, and temporary funding streams provided to insurers by the government that are set to expire in 2017 haven’t really helped suppress their volatility.
The impacts of these unintended consequences are causing a huge disruption in North Carolina’s non-group insurance market. The Exchange infrastructure is unsustainable. Not long ago, United HealthGroup announced its departure from the state’s Exchange. It was offering plans in 77 counties. Last week, Aetna officially announced its exodus, citing losses of $400 million nationwide on Obamacare customers within the first two quarters of 2016. Aetna was operating in 39 counties.
The big question is, “Now what?” Obamacare supporters think insurers should be bailed out with more corporate welfare. Opponents who are mindful of political feasibility think that perhaps uniform universal refundable tax credits will give Americans more health insurance options – whether they opt into a public or private program. John Goodman, one of the foremost health policy experts, says:
Those on the left seem to think that government insurance is better insurance. In fact, study after study has shown just the opposite, even though about two thirds of Medicaid enrollees are in plans run by the private sector.
So while the left thinks that public sector competition would improve the performance of private insurance, in reality competition is likely to improve Medicaid. If it doesn’t, Medicaid will wither on the vine, so to speak, as enrollees migrate to better options. This is a result, by the way, that should be welcomed by everyone – right and left.