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Will Obamacare Survive? Has Aetna’s CEO Defined a Possible Path Forward?

Will Obamacare Survive? Has Aetna’s CEO Defined A Possible Path Forward?

A striking duality in large-scale health insurers’ approach to participation in Obamacare has emerged. It gives hope that some large players will weather the current storm and remain a critical lynchpin in the national healthcare experiment.

On the negative side, some national and regional players have said that remaining in Obamacare just doesn’t make financial sense. And who can blame them? They say the math will never work. This group is led by United Healthcare and to some degree, Humana. United has already announced it will exit the Exchanges almost in full in the coming year, save for a few exceptions in reasonably viable states. Humana, too, has indicated it has already decided it will not participate in a number of states, with final decisions on other states to come before filing deadlines. The significance of Humana’s position is tempered by the fact that it is being acquired by Aetna, and the combination of the two insurance giants looks set to close in the near term.

The United, Humana, and other regional pullouts create a dilemma for the Exchange program. While a small percentage of overall enrollment, some of these players, especially United, play an important role for plan access in critical areas of the country. Latest predictions suggest that pullouts leave many regions and counties vulnerable to having just one plan selection in 2017. The Wall Street Journal estimates that 650 counties will have only one carrier in 2017 — up from 225 counties in 2016. The move by United and others opens the possibility of no carriers in certain states or regions. In that case, the subsidies granted to people for Obamacare would be worthless. And even with one player, rates and benefits (despite the all-encompassing mandate) become major issues for consumers there.

On the positive side, other national players have a surprisingly optimistic (at least much less pessimistic) view of the future of Obamacare. Anthem recently announced strong first quarter results driven by membership growth, including almost 200,000 in the Exchanges. Anthem picked up the slack when various co-op experiments folded under the weight of the risk corridor short-funding. Anthem is even talking about Obamacare as a growth opportunity and sees 2017 expansion possibilities if the merger with Cigna goes through. Cigna has always stated it expected losses for a few years and already signaled expansion plans in 2017. Anthem’s chairman bluntly stated recently: “I think a sustainable model can be built.”

Aetna remains positive, too. It recently announced strong earnings and membership growth, including growth on the Exchanges. Mark Bertolini, Aetna’s Chairman and CEO, even recently outlined a deliberate rationale for why he, and perhaps other players, remain in the Exchange. As he noted in a recent CNBC interview, it may all be about economics and capital deployment. As an example, Bertolini insightfully notes that the losses seen in Obamacare for Aetna in the states it has participated in are much smaller than what it would cost his company to acquire entities in these states or actually invest to enter these markets. The losses are a fraction of the potential investment cost. And participation introduces the prospect of expanding to other commercial, Medicare, and Medicaid lines of business.

Showing a mature approach to the overall experiment, Bertolini is not giving up on the concept of universal access to healthcare, but offering concrete reforms that may stabilize the effort and allow it to succeed in the future. His thoughts for reform include:

  • Attracting a broader population to join, including younger people and the extensive uninsured population
  • Creating more benefit flexibility and introducing new products
  • Creating greater rating flexibility and a larger range of rates
  • Introducing ways for plans to have greater cost control to allow for more affordable products

Bertolini’s approach is solid, and all policy-makers would be wise to take note. The current course of Obamacare will likely lead to high costs for both consumers and the federal government, limited access, and even implosion, if all goes wrong. While a rate death spiral has not yet emerged, the rich-benefit construct and regulation offers little incentive for lower risk individuals to enter the marketplace. Consequently, the rolls seem to be dominated by the medically adverse — those who see the bargain of paying high rates for relatively rich benefits.

Under Bertolini’s reforms, universal access and subsidies could remain and a dynamic marketplace could emerge, where a greater variety of products, benefits and rates would attract the sick and healthy alike.

The current one-size-fits-all approach to benefits and rating is sure to be the death knell. Crafting reforms that balance consumer protection and market innovation is key.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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