by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The Affordable Care Act (ACA) needs the state-based exchanges, or “marketplaces,” to function. These exchanges were intended to replace the individual market for health insurance policies. But in recent weeks, insurance companies have released a deluge of bad omens, including financial losses and market exits, which signal that the exchanges are in bad shape. As a result, Americans can expect a reduction in consumer choice and increase in prices in the years ahead.
The demise of the exchanges should concern us all, as consumers and taxpayers. Some will suggest that government bailouts or takeovers of the insurance industry are necessary, but the right solution is just the opposite: We should offer more choices in individual insurance policies, not fewer, and rely on market competition to put downward pressure on price.
UnitedHealth is leaving most of the state-based exchanges next year, citing financial losses. Other insurers have released data on their exchange woes, including a report from BlueCross BlueShield showing new enrollees under Obamacare in 2015 had 22 percent higher medical costs than people who received coverage from employers. This may signal premium increases for BCBS plans in 2017.
Cigna and Anthem are planning to merge; so are Humana and Aetna. While these companies await government approval of their mergers, they’ve remained mostly quiet on their plans for the exchanges, although just this week Humana mentioned possibly raising premiums or exiting some markets next year.