With Aetna Gone, Is ACA Dead?

The latest blow to the ACA exchange is bad news indeed, but some perspective is warranted.

Aetna announced they will be departing from the Obamacare marketplaces in 11 of the 15 states they currently offer plans. This certainly does not look like a good sign, particularly on the heels of UnitedHealth and Humana cutting back their presence on the exchanges as well. I’m not completely sanguine about it, but I don’t think it means Obamacare is in its death throes. To understand the impact of Aetna’s departure, some perspective is needed.

First of all, the nature of Aetna’s exit raises some questions. As recently as April, Aetna’s CEO said the exchanges were “a good investment” [^1]. Aetna appears to have been threatening to exit the marketplaces in order to strong-arm regulators into approving a their merger with Humana, and their bluff got called. Ultimately, big insurers like Aetna probably don’t care much about having a presence in the exchanges – most Americans get their health insurance through their employer (43%), Medicare (17%) or Medicaid (19%), and big commercial insurers make most of their money in the employer sponsored insurance game. Only 6% get their insurance through private plans (up from 5% before the ACA). Enrollment in Obamacare marketplaces has been lower than supporters of the law expected (and hoped), however the low enrollment numbers is largely because employers are keeping people in their plans, not shifting them to private plans in the exchanges – despite the delays in the employer mandate [^2]. And while Aetna and others’ exits from the exchanges have left a few areas with only one insurance carrier, health insurance markets were similarly consolidated before the ACA.

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Insurance companies like Aetna and United are household names, because their main business is employer sponsored insurance, the kind of insurance plans that most people (particularly those who read and write newspaper articles) have for themselves. These companies’ main experience is with employers: their main business is getting employers to get their companies to enroll in their plans.  Very little of what they do is getting individuals to sign up for plans. Less well-known companies like Centene and Molina, however, are posting profits on the Obamacare exchanges [^3]. These companies have a lot of experience running managed lower cost, narrow-network Medicaid plans, getting people with lower incomes to enroll in their private but largely government-financed plans. Now, they’re succeeding in the marketplaces, where people with low incomes sign up for government-subsidized individual plans with lower costs and narrow networks. Markets are supposed to have winners and losers. Is it any surprise that the companies with more experience in this kind of work are succeeding?

Rising deductibles are another bad sign. But again, this is not new. There has been a mostly linear increase in deductibles that started in the 1990s and, like premium increases, it’s difficult to attribute to Obamacare (see graph online). And unlike the status quo ante, Obamacare protects people with an annual out of pocket maximum. Sure, a $6,000 deductible means that people have to pay a lot out of pocket before their coverage kicks in (some might call this “skin in the game”). But with an annual out of pocket limit of $6,600 in 2016, after that, they are 100% insured – no more copays, no more paying anything out of pocket for their care for the rest of the year. Additionally, people with incomes less than 250% of the poverty limit also get cost sharing reductions (specific subsidies for copays, coinsurance, and deductibles) on their exchange plans. Again, far from ideal, but far from the worst tragedy in our health system.

High out of pocket costs will continue to be a problem for many ED patients. Insurers know that EMTALA (appropriately) requires that we evaluate and treat patients in the ED regardless of their ability to pay, and insurers continue to play hardball in negotiating prices and networks. Balance billing doesn’t make us look good, and we need to reframe the issue from “surprise ER bills” to “surprise lack of emergency coverage.” Sadly, I suspect this will worsen before it gets better, particularly as cheaper plans with narrow networks corner the markets, and patients with big surprise bills look very sympathetic to state legislators who can limit balance billing much more easily than they can address the root of the problem. One good sign: despite all the bad press, the number of people with high out of pocket health costs actually declined as people started getting plans on the exchanges [^4]. And paired with that, EDs are seeing a better payer mix (fewer uninsured, more Medicaid) while volumes growth is stable [^5].

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More bad news: exchange premiums are going to increase more in 2017 than they did in 2015 and 2016. Of course this is not good. It would be much better if premiums stabilized. But for individuals, most of the premium hikes will be absorbed by an increase in subsidies. That’s not good for taxpayers or the federal budget, but most shoppers on the marketplace will not feel those hikes. More importantly, premiums in the first year of the marketplaces were much lower than expected. Insurers anticipated a lot more inertia in the marketplaces – once an individual signed up for a plan, they would stick with that company each year, accepting premium increases rather than looking to change plans. Consumers, however, have been savvier than expected, and many more have been shopping around for cheaper plans each year [^6]. Now, it seems that premiums are catching up to where they were expected to be.

Perspective is important. Not only are premium hikes in line with historic averages, but it’s also useful to make accurate comparisons. Remember that before the ACA, individual plans had annual and lifetime coverage limits, there was tons of variation in what plans did or didn’t cover, and millions of people were excluded from getting a plan at all because of preexisting conditions, so comparing premiums today to premiums before 2014 is far from apples to apples. And even with all of these caveats, premiums are 20% cheaper than what CBO predicted, and at least 11% below what they would have been without the ACA [^7].

Here’s another key comparison: Average premiums for a single individual in an employer sponsored plan are $6,251 in 2015 [^8]. Average annual premiums on the Obamacare marketplaces for a single individual are $4,583 in 2016 [^9]. And, 85% of people in the Obamacare exchanges are getting subsidies [^10], so they’re actually paying even less for their plans. And the individual with employer-sponsored insurance is paying their premium with pre-tax money – that’s a form of subsidy, too.

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There has been other mixed news. Some prominent ACOs have left the program; others are posting decent savings. Readmissions have decreased – and despite early indicators to the contrary, readmissions are not being hidden in observation stays [^11]. We’re seeing another wave of health system consolidation, which is a mixed bag: integrated health systems offer opportunities to integrate care, but they also consolidate market power and will likely continue to drive up prices. As the concisely titled article “It’s the Prices, Stupid” [^12] notes, high health costs in the US are largely due to the high prices we pay for health services compared to other countries. But we are also the only developed nation that doesn’t have some sort of government price controls in place.

Bottom line? Things aren’t rosy, but it’s not all gloom and doom either. I’m still cautiously optimistic. Underinsurance remains a problem, but uninsurance has decreased, and preexisting conditions are no longer a thing. My wife is a very healthy dietitian, and a few years before the ACA, she was charged an increased premium (after pages and pages of paperwork) for the preexisting condition of having had a worrisome looking mole removed. The market was punishing her for her responsible behavior, because insurers are only motivated to keep people healthy enough until they move on to their next job or age into Medicare. Now, that equation is a bit better. People can get insurance plans without being punished for having diabetes or having had Hodgkin’s or a getting a mole removed or having a uterus. Insurers can’t deny people access to plans just because they have preexisting conditions, or only offer them plans that don’t cover their medical condition, or charge them more. In fact, insurers don’t even make applicants fill out the same reams of paperwork they used to. There’s room for improvement, but I believe that despite the scary headlines, we’re moving in the right direction.

Medicare has made some big steps towards moving away from fee for service and expanding value based payments, but also recently toned it down. It’s hard to predict how EM will fare in this sort of brave, newish world, and it’s tough to predict how emergency-specific quality measures will impact EDs and hospitals. We continue to be portrayed as expensive and avoidable. We need to figure out better ways to demonstrate the high value care we provide, both as a safety net and as the hub of care coordination.

REFERENCES

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1. Kodjak A. Aetna Joins Other Major Insurers In Pulling Back From Obamacare. NPR. 16 Aug 2016. http://www.npr.org/sections/health-shots/2016/08/16/490207169/aetna-joins-other-major-insurers-in-pulling-back-from-obamacare
2. Carman KG, Eibner C, Paddock SM. Trends In Health Insurance Enrollment, 2013-15. Health Affairs. Oct 2015;34(6):1044-1048 http://content.healthaffairs.org/content/34/6/1044.abstract
3. Laszewski R. Why Are Centene And Molina Making Money On The Obamacare Exchanges? Forbes. 6 May 2016. http://www.forbes.com/sites/robertlaszewski2/2016/05/06/why-are-centene-and-molina-making-money-on-the-obamacare-exchanges/
4. Glied SA, Solís-Román C, Parikh S. How the ACA’s Health Insurance Expansions Have Affected Out-of-Pocket Cost-Sharing and Spending on Premiums. The Commonwealth Fund. 12 Sept 2016. http://www.commonwealthfund.org/publications/issue-briefs/2016/sep/aca-expansions-and-out-of-pocket-spending
5. Pines JM, Zocchi M, Moghtaderi A, Black B, Farmer SA, Hufstetler G, Klauer K, Pilgrim R. Medicaid Expansion In 2014 Did Not Increase Emergency Department Use But Did Change Insurance Payer Mix. Health Affairs. 1 Aug 2016;35(8):1480-6. http://content.healthaffairs.org.ezproxy.galter.northwestern.edu/content/35/8/1480.abstract
6. Sanger-Katz M. High Rate of Shopping and Switching in Obamacare Plans Is a Good Sign. The New York Times. 26 Feb 2016. http://www.nytimes.com/2015/02/27/upshot/high-rate-of-shopping-and-switching-in-obamacare-plans-is-a-good-sign.html
7. Adler L, Ginsburg PB. Obamacare Premiums Are Lower Than You Think. Health Affairs Blog. 21 July 2016. http://healthaffairs.org/blog/2016/07/21/obamacare-premiums-are-lower-than-you-think/
8. Claxton G, Rae M, Panchal N, et al. Health Benefits In 2015: Stable Trends In The Employer Market. Health Affairs. Oct 2015;34(10):1779-1788. http://content.healthaffairs.org/content/34/10/1779.abstract
9. Levitt L, Cox C, Claxton G. How ACA Marketplace Premiums Measure Up to Expectations. Kaiser Family Foundation. 1 Aug 2016. http://kff.org/health-reform/perspective/how-aca-marketplace-premiums-measure-up-to-expectations/
10. Leonard K. Insurers Fret Over Obamacare’s Grace Period. US News & World Report. 14 Sept 2016. http://www.usnews.com/news/articles/2016-09-14/insurers-fret-over-obamacare-grace-period
11. Zuckerman RB, Sheingold SH, Orav EJ, Ruhter J, Epstein AM. Readmissions, Observation, and the Hospital Readmissions Reduction Program. NEJM. 21 Apr 2016;374(16):1543-1551. http://www.nejm.org/doi/full/10.1056/NEJMsa1513024
12. Anderson GF, Reinhardt UE, Hussey PS, Petrosyan V. It’s the prices, stupid: why the United States is so different from other countries. Health Affairs. May 2003;22(3):89-105. http://content.healthaffairs.org/content/22/3/89.abstract