Question mark for ACA health marketplaces
Choices have become more limited
WASHINGTON — It’s been a rocky few months for the health insurance marketplaces created by the Affordable Care Act.
Even if you’re not one of the roughly 11 million Americans who rely on these online exchanges to get your health insurance, you’ve probably seen the headlines about rising premiums and insurance companies pulling out of the system.
Last week, national insurance giant Humana announced it would stop selling plans on the marketplace. Aetna’s chief executive claimed the marketplaces are ina “death spiral.”
Republicans say the marketplaces are Exhibit A that Obamacare is collapsing.
Here’s a rundown of where things stand.
Q: How do market places work?
A: The Obamacare marketplaces, such as HealthCare.gov, allow people who don’t get health benefits atwork to compare a variety of competing plans that all have to offer a basic set of benefits.
Low- and moderate-income consumers get federal subsidies to help pay their monthly premiums. And the plans are prohibited from turning away customers who are sick.
Before Obama care, insurance companies were free to reject sick people. And even customers who could get a plan often found it didn’t cover what they thought.
Q: What went wrong? A: Many insurers discovered that the people who were signing up were sicker and more costly than they expected. That meant some insurers were losing money. To deal with this, insurers could raise premiums. Or they could bail on the marketplaces.
There’s been a little of both over the past year. In some states, average 2017 premiums shot up more than 50 percent, though premium increases were more modest in other places.
Some insurers like Humana, Aetna and UnitedHealth care pulled out of marketplaces altogether.
That’s created a lot of angry customers in some parts of the country.
Q: So are the marketplaces going to collapse?
A: To date, there is little evidence of this. Enrollment on the marketplaces this year has remained relatively steady, even with the premium hikes.
Nonetheless, the departure of insurers has left consumers in some parts of the country with few options to choose from. In a handful of places, theremay be no insurer next year unless something changes.
Q: What would it take to fix the marketplaces?
A: Insurers say too many people are gaming the system by signing up only when they are sick. The industry wants tighter restrictions on when consumers can enroll in coverage on the marketplaces. The Trump administration just gave the industry some of what it wanted by limiting when people could sign up.
Insurers also say they could make health plans cheaper and more attractive to younger people if they could charge those people less, though that might mean charging older customers more.
Others say that offering consumers more financial assistance to pay their premium swould help.
Q: What do Republicanswant to do?
A: Many GOP lawmakers are talking about completely overhauling the way Americans who use the marketplaces get coverage.
Instead of making insurers all meet basic standards, for example, Republicans would let states set their own standards.
Many GOP plans would also replace the way that marketplace consumers get financial assistance with their premiums.
The Obamacare subsidies are linked both to consumers’ incomes and to howmuch health plans cost in their states.
Republicans are talking about linking the value of the subsidy to age, with older consumers getting more financial assistance than younger consumers.
Q: Will thatwork? A: It’s difficult to say since Republicans haven’t offered details about their plans. What’s important to understand is that everything involves trade-offs.
Reducing requirements on which benefits insurers must offer, for example, might allow more plans with limited benefits. Those could be cheaper.
But they might also leave consumers without vital protections they need.
Similarly, a new system of financial aid that is based only on a consumer’s age would be much simpler than the current system.
But it also would mean that young people with low incomes might have a hard time affording a health plan. That would deprive insurance markets of the healthy enrollees they most need.