2017: The Year of the Obamacare 'Death Spiral'?

Jean Morrow

Politics,

It could happen. Here's why: 

UnitedHealthcare’s decision to not offer Affordable Care Act exchange plans next year in “at least 26 of the 34 states where it sold 2016 coverage” may soon be followed by similar announcements from other health care insurers.

At least that is one implication that can be drawn from the findings reported in a new paper analyzing the performance of insurers that offered exchange coverage in 2014.

The paper’s authors—Heritage Foundation senior research fellow Ed Haislmaier, Mercatus Center senior research fellow Brian Blase, and Galen Institute senior fellow Doug Badger—examined enrollment and financial data for the 289 Qualified Health Plans sold on the exchanges in 2014.

They found that, in the aggregate, insurers incurred substantial losses offering exchange coverage. Furthermore, the poor results were despite insurers receiving substantial subsidies—indeed, more than they originally expected—through the Affordable Care Act’s “reinsurance” program. Specifically, they found that aggregate insurer losses were in excess of $2.2 billion, despite insurers receiving net reinsurance payments of $6.7 billion.

They also discovered wide variation in insurer performance selling exchange plans in 2014. Insurers with narrow provider networks appear to have done relatively well, while the Affordable Care Act created health insurance cooperatives, established with government funding, incurred the greatest losses.