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First, the main problems: - To put things in context, the exchanges cover 11M people, only a fraction of health insurance in the US.
- Cost is a major issue, especially those of new very expensive drugs like those for Aids and Hepatitis C.
- The population seeking insurance through the exchanges is sicker and older than expected (which testifies to a huge unmet need for healthcare pre-ACA).
- Like on any new market, companies have to figure out the right strategy, some shake-out was unavoidable
- A booming jobs market has boosted the number of people who get insurance through their employers, lessening the demand on ACA exchanges.
Quote:Fixing Obamacare’s exchanges will take three main steps:
- First, companies need to adjust their strategies to the real economics of Obamacare, which are just now becoming clear.
- Second, regulators need to make changes to accommodate insurers that are facing sicker patients than expected and, especially, a wave of extremely expensive drugs concentrated in the treatment of hepatitis C.
- Finally, Congress needs to make fixes, the most important being subsidizing more of the premiums paid by middle-class customers — the kind of midcourse adjustment that Congress routinely makes for Medicare but which has been politically impossible for Obamacare.
First, insurers have to get their own act together and control costs where they can.
Insurers Can Make Obamacare Work, But They Need Help From Congress | FiveThirtyEight
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From the New York Times
Obamacare Marketplaces Are in Trouble. What Can Be Done?
By REED ABELSON and MARGOT SANGER-KATZ AUG. 29, 2016
It has been a hard couple of weeks for Obamacare. The law’s online marketplaces — where people were supposed to be able to easily shop forhealth insurance — have been suffering from high-profile defections and double-digit premium increases.
Critics of Obamacare have pointed to the recent problems as proof the market is not working, while even the law’s staunchest defenders are arguing that the marketplaces need some fixes. Here are four key challenges to the program and a survey of some possible solutions.
Choice is disappearing
The problem: The insurance co-ops created by the law have mostly gone belly-up. UnitedHealth bowed out of most states where it offered individual plans on the exchanges. Aetna pulled out from 11 states. And smaller carriers, like the start-up Oscar Health, which has been struggling, have reduced their footprint.
Three years in, many established insurers say they are seeing their losses from selling individual plans deepen. Many of the nonprofit Blue Cross plans and other well-regarded insurers, like Geisinger Health, are having trouble. There is something of a herd mentality taking place — if all my competitors are leaving, maybe I should, too.
Why it’s a problem: Competition, at least in theory, helps keep premiums low and service high. That’s the whole point of having a market for health insurance. But 17 percent of people eligible for this market might have no choice of carrier next year.
Possible solutions: If the market looks as if it’s growing and stable, some insurers might come back. Both President Obama and Hillary Clinton have also revived the idea of the so-called public option, which would be a government-run plan that would either compete with or be a substitute for a plan offered by a private insurer. It’s politically controversial and hard to make work in practice.
Prices are rising
The problem: Everyone is anticipating a much bigger price increase for Obamacare plans next year than in the past.
Why it’s a problem: People who do not receive federal tax credits to help pay for their coverage are particularly hard hit by having to pay higher premiums and could be unable to afford the cost. They are a small minority of people currently in the Obamacare marketplaces, but more than a thirdof all people buying their own insurance, according to recent estimates. Higher premiums are also bad for taxpayers, since federal dollars help subsidize premiums for middle-income customers.
Possible solutions: Bring down costs instead of raising prices. More and more insurers are choosing to limit the number of doctors and hospitals they will cover in their plans. A lot of the reason that health insurance is so expensive in the United States is that doctors and hospitals charge more here than their counterparts in other countries. So the narrow network strategy may be a smart way to start getting different groups to negotiate down on their prices.
There are downsides to this strategy, of course. One is that it may be hard for patients who have complex health needs to find the care that they need with every plan. The other is that it could create a lot more disruptions in care for people, if they have to switch plans — and all their doctors — every year in order to get a good price on insurance. In the long run, insurers may have to find other ways to lower costs, like keeping customers healthier.
Another, simpler way to bring down prices would be to get more healthy people into the market, so the average insurance customer costs less, or use other tools to absorb the cost of people with complicated and expensive medical conditions. (See below.)
The market is too small
The problem: There are currently about half as many people in the exchanges as the Congressional Budget Office expected.
Why it’s a problem: About 27 million Americans still don’t have insurance, a bad thing by itself in a country where health insurance is often crucial to ensuring access to health care and protection from financial ruin. But too few customers also matter for the functioning of the market. Smaller markets make it hard for insurers to absorb the costs of a few sick patients. In some places — especially big cities — there are still enough people to spread out risk. But in many parts of the country, too few healthy people are signing up to balance the cost of those needing expensive medical care. And it means that, especially if a company is having trouble making money, there’s not a lot of upside to sticking around.
Possible solutions: Change the incentives, so more people who are currently uninsured buy health insurance. Hillary Clinton has talked about giving out more generous subsidies, so insurance costs less and more people can afford to buy it. Many Republican politicians suggest another way to lower prices: eliminating current requirements that insurance cover a wide array of services. Some policy experts, including Uwe Reinhardt, a Princeton health economist, in a recent Vox.com interview, have suggested tightening up the penalties for remaining uninsured, so people can’t wait and buy insurance only after they get sick.
A more controversial way to increase enrollment in the marketplaces would be to make employer coverage less attractive, so that more people who currently have insurance from work switch to buying their own. It was widely expected that this would happen as the law rolled out, but so far it hasn’t.
The rules are complicated
The problem: Some of the tools the federal government relied on to try to protect the insurance companies from large losses, especially in the early years, have not been as effective as the companies had hoped. The current rules ensure that a company doesn’t benefit from having healthier customers than its competitors, but doesn’t help insurers make up the losses when their overall premiums don’t cover their costs.
Why it’s a problem: If the insurers think the marketplace is unfair, or that there’s no way they can ever make money there, they are unlikely to participate. Because the health law relies on private companies to participate, conditions have to be favorable enough to keep them involved.
Possible solutions: The insurers that remain in the market — particularly many Blue Cross plans — have a long list of policy requests that would make their business less risky: by making it harder for sick people to buy coveragefor short periods of time, by subsidizing the plans’ losses for very expensive patients, and in some cases by charging higher prices to older customers, who are more likely to be sick. But regulators have been cautious about embracing them, because such moves would shift financial risk to taxpayers and make it harder for people who need health care to get insurance.
The Obama administration has already made a few changes, includingmaking it a little harder for people to sign up for insurance in the middle of the year. It has also signaled to Congress and state legislatures that a “reinsurance” program, which would pay insurers back for the sickest of their patients, would be a good idea.
There is little consensus among experts and advocates about what fixes would have the biggest impact when it comes to stabilizing the markets. The divides are not just partisan, but reflect persistent uncertainty about the most important things going wrong, and the most effective solutions to fix them.
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Quote:Firms that have experience in lower cost government programs such as Medicaid have been far more successful in the exchanges, even making profits. These firms are able to offer competitively priced plans with a lower cost structure than the large firms like Aetna, UnitedHealthcare, and Humana. By not being able to figure out the right cost structure, some of the blame has to fall at the feet of insurers. If these firms do retool, there is a chance that they re-enter the market. For one thing, many of these same insurers that are pulling out of the exchanges have at one time expressed support and desire to stick with the program
Additionally, the CMS proposals are attempting to make adjustments so that the markets are more viable for insurers. For instance, it is planning to adjust the risk pool, which essentially rewards firms for taking on sicker patients on aggregate and penalizes those that accept a more healthy, low cost group. (There's more to it, and you're welcome to read a full explanation here.) This mitigates some of the risks for insurers on losing money. So if there is combination of better support from the government and a little learning from the insurers themselves, there is a chance to reverse the flow of Obamacare entrants.
Obamacare can succeed needs a lot of work - Business Insider
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It isn't rocket science..
Quote:We know how to draw insurers into markets, keep them there, and limit premium growth. We can do so by subsidizing plans more and by limiting their risk of loss. We’ve done both before.
In the early 2000s, Medicare+Choice— then the name of what is now the Medicare Advantage program, which offers private plan alternatives to traditional Medicare — was struggling.
The proportion of Medicare beneficiaries with access to a Medicare+Choice plan declined from 72 percent in 1999 to 61 percent in 2002. The number of plans offered dropped 50 percent, and enrollment dropped 21 percent. Insurance industry representatives said that the problem was that government subsidy payments to plans were not keeping up with costs.
After payments to plans drastically increased as part of the 2003 Medicare Modernization Act — passed by a Republican Congress and signed by President George W. Bush — insurers flooded the market. This was controversial. Members of Congress from both parties expressed concern that plans were overpaid, wasting taxpayer resources..
Politics Aside, We Know How to Fix Obamacare - The New York Times
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Quote:The gravest danger facing Obamacare now is not legislative action — it’s executive inaction. Fortunately for the millions who rely on the Affordable Care Act, the states can save the health care law from “exploding.” But they need to move fast.
4 ways states can prevent the Affordable Care Act from “exploding” - Vox
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It isn't actually rocket science, here is one solution that was successfully implemented:
Quote:Last year, Alaska’s Obamacare marketplaces seemed on the verge of implosion. Premiums for individual health insurance plans were set to rise 42 percent. State officials worried that they were on the verge of a “death spiral,” where only the sickest people buy coverage and cause rates to skyrocket year after year. So the state tried something new and different — and it worked.
Lori Wing-Heier, Alaska’s insurance commissioner, put together a plan that had the state pay back insurers for especially high medical claims submitted to Obamacare plans. This lowered premiums for everyone. In the end, the premium increase was a mere 7 percent. "We knew we were facing a death spiral," says Wing-Heier. "We knew even though it was a federal law, we had to do something."
Now other states are interested in trying Alaska’s idea, especially because Wing-Heier is working with the Trump administration to have the federal government, not the state, cover those costs.
How Alaska fixed Obamacare - Vox
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Will they do it?
Quote:A prominent and unlikely group of liberal and conservative health experts have authored an ambitious plan to fix the Affordable Care Act — and they plan to make a hard push for their ideas on Capitol Hill. The plan is notable because it has the support of especially well-connected health advisers on both sides of the aisle. This new plan would aim to bring more stability to the Obamacare marketplaces by securing funding for key health law subsidies and ensuring strong incentives to enroll in coverage. In a nod to conservative priorities, it would also allow states more flexibility to pursue experimental waivers and higher contributions to tax-advantaged health savings accounts.
Top Democratic, Republican health experts agree on this plan to fix Obamacare - Vox
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That's what the government should do, according to the public. Fixing the exchanges. It isn't rocket science, it can be done.
Quote:Sixty percent of Americans say it's a "good thing" that President Donald Trump and Republican lawmakers failed to pass legislation repealing and replacing Obamacare, according to the August Kaiser Health Tracking Poll. A large majority of the public disapproves of Trump's suggestion that Republicans "let Obamacare implode" and move on to other policy priorities — 78% of those polled said Trump should do what he can to make the law work. A majority — 57% — say they want Republicans to work across the aisle to make fixes to former President Barack Obama's signature healthcare law, also known as the Affordable Care Act. And equal shares of respondents (21%) said they want the GOP to continue working on its own replacement bill or to abandon their efforts altogether. Of the 78% who said the Trump administration should do what it can to sustain Obamacare, 51% were Trump supporters. Just 17% said the Trump administration should undermine Obamacare or let it fail.
Americans do not want Trump to 'let Obamacare implode' - Business Insider
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This looks like a very good idea!
Quote:Democrats are ready to go on the health care offensive. And Sen. Brian Schatz (D-HI) may have a new plan for them to do it. In an interview with Vox, Schatz revealed that he’s preparing a new bill that could grant more Americans the opportunity to enroll in Medicaid by giving states the option to offer a "buy-in" to the government program on Obamacare's exchanges. His proposal would expand the public health insurance program from one that covers only low-income Americans to one open to anyone seeking coverage, depending on what each state does. The idea is similar to the government-run “public option” that some Democrats advocated for during the battle over the Affordable Care Act’s passage.
Exclusive: Sen. Schatz’s new health care idea could be the Democratic Party’s future - Vox
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