This week Aetna announced that it would be withdrawing from many of the states in which it offers health care plans on the Affordable Care Act exchanges. Aetna participated in exchanges in 15 states, and it will be withdrawing from 11 of those 15.
It’s more bad news for “Obamacare,” which has seen other major insurers back away from offering plans, too. Aetna says its decision is prompted by substantial losses it is experiencing on the exchanges, all of which arises from the fact that the pools of covered individuals has turned out to be sicker than was originally forecast — and therefore more likely to need expensive care. If fewer insurers offer plans on the exchanges, there obviously will be less competition, and less choice. As Aetna’s decision reflects, however, the effect will vary on a state by state basis.
In the meantime, premiums on the exchange plans are going up — and the “individual mandate” penalty for not having health insurance is ratcheting up, too. In 2017, the average penalty will be $979 per household. The question is whether the threat of having to pay a $1000 penalty will drive more people to enroll, and whether those currently uninsured people who do enroll will be healthier and therefore help to hold down the costs of the plans for the insurers who offer them, so more even insurers don’t exit the plans. Ever since the Affordable Care Act was passed, the question has been whether the exchanges can avoid the “death spiral” in which enrollment shrinks, leaving only sick people in the plans, causing ever-greater losses and ever-increasing premiums that simply can’t be sustained.
The Affordable Care Act is unquestionably the signature domestic policy achievement of the Obama Administration. It’s also another huge government program seeking to force behavioral changes that is anathema to both fiscal conservatives and social libertarians. In any rational world, a presidential election would be a forum for discussing whether, and if so how well, “Obamacare” has worked — and what alternatives would be.
Of course, we don’t have such discussions about actual policy issues or the real-world performance of important initiatives like the Affordable Care Act in this election. No, we’re too busy talking about Donald Trump’s latest idiotic foot-in-mouth-episode, or Hillary Clinton’s health issues, or other extraneous topics. This is the most content-free presidential election in my memory.
We need to remember that the real world is still out there.