Obamacare in Critical Condition as Major Insurers Flee the Market
Policy + Politics

Obamacare in Critical Condition as Major Insurers Flee the Market

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The Obama administration is gearing up for a major promotional campaign to bolster signups for the Affordable Care Act in 2017, but officials already are encountering stiff headwinds.

With major insurers including Aetna, UnitedHealthcare and Blue Cross-Blue Shield pulling out of the program in many states to avoid even more huge financial losses as well as stiff increases in premiums in many states, sign ups will plateau or even decline next year, according to some experts.

Related: Get Ready for Huge Obamacare Premium Hikes in 2017 

The law designed to provide both subsidized and market-rate insurance coverage to Americans who lacked coverage through an employer or who did not qualify for Medicaid, covered 11.1 million people as of March, its third full year of operation. A new S&P Global Ratings report projects that enrollment next year will range from a 4 percent gain to an 8 percent decline compared to 2016 levels, as Bloomberg first reported.

“Our forecasted modest-to-negative growth is clearly a bump in the road, but doesn’t signal ‘game-over’ for the marketplace,” Deep Banerjee, an S&P analyst, wrote in a report released yesterday.

Earlier this week, Democratic Minnesota Gov. Mark Dayton declared that the Affordable Care Act “is no longer affordable for an increasing number of people” and that rising premium costs were squeezing many middle-class Minnesotans out of the program.

Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation, said in an interview today that the coming open enrollment period “will be pivotal,” with the results “affecting perceptions among insurers and policymakers about how the law is doing and whether fixes are necessary.”

Related: Minnesota Could Be the First Obamacare Domino to Fall

Marketplace enrollment grew by about 1 million during open enrollment for 2016. “Achieving even modest growth for 2017 will be challenging, with premiums rising and the remaining uninsured getting tougher to reach,” Levitt added. “The administration is hoping that their new efforts at targeted outreach, including reaching out to people facing penalties for remaining uninsured, will prove successful.

One of the biggest problems is that with so many major insurers heading for the door, consumers will have fewer options shopping for health insurance coverage that suits their needs and their incomes. For those who are not eligible for government tax subsidies through Obamacare, the remaining higher priced options will provide little incentive to stay in the program.

Highlighting the dilemma for many consumers, Bloomberg reported on Friday that at least 1.4 million people in 32 states would lose the Obamacare health plan they currently have because Aetna, UnitedHealthcare, BlueCross BlueShield and some state or regional insurers have dropped out of the program. The report was based on a survey of state officials and insurance commissioners across the country.

The five states hardest hit by those departures are Florida, North Carolina, Tennessee, Illinois, Nebraska and Pennsylvania. According to a recent Kaiser Family Foundation projection, the share of enrollees nationwide who could choose between three or more insurers will drop from 85 percent this year to 62 percent in 2017. At the same time, 19 percent or more of Americans participating in the Affordable Care Act’s individual market next year will have only one insurer from which to choose.

Related: It’s Time to Blame Obamacare for Losing So Many Full-Time Jobs 

In North Carolina, for instance, a BlueCross BlueShield insurer will be the only option in 95 of the state’s 100 counties after Aetna and UnitedHealthcare announced earlier this year that they would leave. That means that 284,000 people will be seeking a new plan, according to state officials.

Meanwhile, roughly 82,000 Nebraskans will pay more than expected for individual health insurance next year because of Blue Cross-Blue Shield’s decision to no longer offer policies on the Obamacare exchanges, the World-Herald of Omaha reported this week. That decision will likely result in the two remaining insurers – Medica Health and Aetna Health – raising their premiums next year by between 40 percent and 55 percent, according to the newspaper.

Department of Health and Human Services officials insist that despite a flurry of negative news, they anticipate more positive growth in program enrollment that began with 6.3 million in 2014 and then rose to 8.8 million in 2015 and11.1 million this year.

“HHS is looking forward to a successful fourth Open Enrollment, and we expect continued growth in the marketplace,” HHS press secretary Marjorie Connolly said in an emailed statement today. “As the uninsured rate continues to fall to record lows, we are confident that this year’s outreach strategy will keep connecting Americans with coverage they need and want.”

Related: White House Is Spending Millions to Battle Obamacare Rate Hikes 

It didn’t help when former President Bill Clinton took a shot at Obamacare during a speech in Flint, Michigan when he said, “The people who are getting killed on this deal are small business people and individuals who make just a little too much to get any of these subsidies because they’re not organized. They don’t have any bargaining power with insurance companies, so they’re getting whacked.”

“So you've got this crazy system where all of a sudden 25 million more people have health care and then the people who are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half. It's the craziest thing in the world," Clinton said.

With the 2017 enrollment season’s kicking off November 1, the administration is planning to run TV ads and distribute 10 million pieces of direct mail to promote Obamacare. The ad campaign will largely target people who were recently uninsured, who have lost coverage, or who have sought coverage in the past from the Obamacare exchanges operated by the federal government or states.

However, the campaign could be drowned out by Republican presidential nominee Donald Trump and GOP congressional candidates who are running against Obamacare and are likely to seize on reported hikes in premiums and out of pocket costs to argue the program is a failure. Or they could count on Bill Clinton to do it for them.