I’m not quite sure how you argue that this is a success. Of the 23 non-profit member-run insurers that started out offering healthcare insurance through the federal marketplace in 2014, only 8 will continue to do so in OE4, the fourth open enrollment period that begins this fall. From the Washington Post:
The number of insurers carrying out one of the Affordable Care Act’s most idealistic goals continues to plummet, with just eight nonprofit member-run health plans set to take part in the law’s fourth enrollment season this fall.
That’s down from 23 such plans — co-ops, as they are commonly known — that started in 2014. Eleven are still in business, but three in Oregon, Ohio and Connecticut will fold soon because of financial insolvency. Just this month, Oregon’s Health Co-Op and Connecticut’s HealthyCT were ordered to close by their state’s regulators.
For the rest — which all posted annual losses in 2015, according to the National Alliance of State Health Co-ops — survival is Job No. 1. Some co-ops are diversifying to serve larger employers, no longer limiting themselves to their ACA mandate to offer health plans to individuals and small businesses. Others are trying to renegotiate contracts with hospitals and other providers.
My interpretation of that is that the the healthcare insurance business is quite difficult under the restrictions imposed by the Affordable Care Act. It’s hard for experienced, established carriers and it’s that much harder for newcomers.
It won’t be a disaster if no co-ops continue to participate. The for-profit insurance companies will still be there. The open question is what happens if nobody is offering insurance in some of the markets? Nobody really knows.
The graph at the bottom of this Daily Signal piece calculates the fiscal bottom line of each of the Obamacare failed co-ops.
When one looks at the debris field of government lies, disrupted health care plans and access to one’s usual health care services, higher deductibles for many, unsubstantiated subsidies for others, etc. that were generated by the controversial unilateral passage of the PPACA, can you really say Obama’s healthcare legacy was worth it?
That’s an unanswerable question. For those who need it and can’t pay for it the answer is unquestionably “Yes”. For those don’t benefit from it but pay for it the answer will probably be “No”. For those who might benefit from it and pay something, even below market value, for it, probably somewhere in between.
Breaking into the health care market has always been difficult. We providers, this is a simplified version, set fees for what we do. We discount those for the large insurers since they provide lots of patients. (Really, they just dictate what they will pay.) If a new insurer comes along and asks to pay the same fees as the established, big guys, we generally say no. We don’t even know if we are going to get paid at all, will it be on time, how will they resolve conflicts and errors? So we expect higher fees from those new insurers. If a new insurer wants to break into a new market they usually need pretty deep pockets. (This is one of the reasons why the talk about selling across state lines is kind of amusing.)
Steve
I suspect Jan was questioning the form of the program – PPACA – vs any program.
I could make the same benefit and who pays arguments for public education, but the program stinks. For military spending and the Pentagon, but it stinks.
If I’m disproportionately financing other people’s food with vouchers called food stamps, Section 8 housing, public education (without vouchers)…………I can do same for their health insurance but without the features of PPACA.
There had to be other motivations.
The co-ops don’t appear to serve any useful function. When my former small business used to ask our insurance agent for competitive health insurance quotes, we would get about six, with only two or three being competitive. IOW, the problem isn’t that there are not enough businesses offering insurance, which is what government subsidies for new businesses would address.
Despite the tongue-in-cheek title of this post, I think the insurance business is pretty easy. You take money, you invest at least a portion of it, and you pay claims. Established carriers have negotiated preferred terms with healthcare providers, that either new entrants would need to negotiate for themselves or they will fail. Arguably (or at least this is the argument for single-payer), the fewer the number of insurance carriers, the greater the leverage to reduce costs. In any event, its not clear how an additional carrier changes much.
Dave, I think those who benefit vs those who don’t will probably always view a program or piece of legislation in a personal, subjective manner. However, when “fairness” is objectively interjected into a discussion, I think the PPACA is just another socially designed government program of “winners and losers,” rather than a fairly administrated way of dealing with healthcare distribution to the masses.
@steve, I posted before reading your comment. I would say from the consumers standpoint, we were reluctant to change providers for similar reason, we didn’t know if service would be better or worse and were unsure if, or the extent, people would need to change providers. I only recall switching once and that was because we were being forced off the plan by the insurer through much higher rates.
I think selling across state lines has to do with forcing states to be regulatorily competitive. See:
https://www.aei.org/publication/the-pros-and-cons-of-selling-health-insurance-across-state-lines/
It can be when interest rates are high but when they’re low it can be very difficult. There are only two ways of making money in the insurance business: premiums and investments. The PPACA caps premiums relative to reimbursements. With interest rates as low as they are now you’ve got to be very, very careful and skilled to make any real money.
“Arguably (or at least this is the argument for single-payer), the fewer the number of insurance carriers, the greater the leverage to reduce costs.”
That has actually been studied. When there are lots of insurers, costs tend to be higher since they don’t have the leverage to force down costs. As you reduce the number of insurers costs drop until you reach a point where they rise again. That seems to be because insurers basically gain a monopoly in their area and stop caring so much about costs. Cutting costs would mean losing some providers which might cause people to change insurer and they don’t want to lose market share. However, in the case of a single payer you would not be worried about losing market share.
As to the article you cite, I hope the inconsistencies are obvious. They want to have the states assume as much of the regulatory burden as possible for health insurance. The don’t want the states to be able to control the regulations in their own state, forcing them to allow insurance complying with another state’s regs to sell in state. Their attempt to remain true to their ideology is pretty funny.
For my part, dealing with state regs creates me lots of hassle, headaches and costs me money. We have been asked to hep provide coverage in New Jersey. What a mess. So much of what the states regulate should be national. There is no reason that you should have to be licensed individually in each state. It creates expenses, and lets the marginal providers sneak from state to state. AS for the individual state regulatory environment, I think it should also be either national or let states work together regionally, as was set up in the ACA.
Finally, note that there are no federal rules against selling across state lines. This is all driven by the states. Look at Georgia where they passed a law allowing across the border sales of insurance regulated by the originating states, i.e. not Georgia. That has failed.
http://www.nytimes.com/2015/09/01/upshot/the-problem-with-gop-plans-to-sell-health-insurance-across-state-lines.html?_r=0
Steve