Will The Government Force Health Insurers To Sell In Obamacare Exchanges?

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UnitedHealthcare’s recent announcement that it would reconsider its participation in Obamacare health insurance exchanges drew a lot of attention and rightfully so. If the nation’s largest health insurer is losing money and leaves the exchanges, can other health insurers be far behind?

According to UnitedHealthcare’s statement: “In recent weeks, growth expectations for individual exchange participation have tempered industrywide, co-operatives have failed, and market data has signaled higher risks and more difficulties while our own claims experience has deteriorated, so we are taking this proactive step,” said Stephen J. Hemsley, chief executive officer of UnitedHealth Group.”

It goes on to say: “UnitedHealthcare has pulled back on its marketing efforts for individual exchange products in 2016. The Company is evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017.”

And UHC isn’t alone. The Hill reports that during the fall more than a dozen health insurers covering some 800,000 people dropped out of the exchanges. What would the federal government do if there were a stampede to the exchange exit door? Depends on who’s pulling the levers in Washington.

If Republicans were controlling Congress or the White House, it’s likely nothing would be done—except, perhaps, for a little “we told you so” gloating at Democrats who singlehandedly gave us Obamacare.

But if Democrats were in control, especially of the White House, they would make a concerted effort to stop the health insurer rout. Having faithfully promised people would have access to a wide range of health insurers inside the exchange, empty exchanges would make them look even more foolish than they do now.
What could they do? There are at least three options.

First, they could try to restore the health insurer bailout in Obamacare, known as the risk corridor program.
Senator Marco Rubio introduced a provision in a 2014 budget bill that prevents the Department of Health and Human Services (HHS) from using money in other accounts to subsidize health insurers.

Without the ability to shuffle funds, HHS was only able to provide a small portion of the risk corridor bailouts—12.6% of $3 billion owed—which played a role in the demise of so many of the health insurance co-ops. Hence, health insurers, which were counting on that money to boost profits, are rethinking their commitment to the exchanges.

Second, the government, and especially states, might require health insurers wanting to sell other health insurance products or in other markets—e.g., group health insurance or long term care coverage—to sell in the exchanges. New York did that when it passed health insurance reform legislation in 1993 that, like Obamacare, required health insurers selling to individuals to accept anyone who applied regardless of their health status, known as guaranteed issue.

New York knew that lots of health insurers were selling coverage to businesses, and insurers didn’t want to lose that business. So the state required health insurers selling group coverage to also sell in the individual market.
The third option is to mandate that private health insurers providing some type of coverage in the two primary federal health insurance programs, Medicare and Medicaid—e.g., Medicare Advantage, the Part D prescription drug benefit, or Medicaid managed care—must also sell coverage in the Obamacare exchanges. If you want federal money, you do what Washington wants you to.

That’s how the feds force hospitals, nearly all of which take Medicare and Medicaid patients, to accept anyone who walks in the emergency room, a law known as EMTALA.

Of course, Republicans have no interest in stopping the exchange bleeding; they would rather pull the plug on Obamacare. Democrats, by contrast, would try to keep Obamacare on life support.  Which is why, next to Republicans’ “repeal and replace” efforts, your vote next November may determine whether this Obamacare patient lives or dies.

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