3 states down to one Obamacare insurer

The crisis in Obamacare continues to grow as three states report that only one health insurance company will be offering a plan on the Obamacare exchanges.

The Alaska, Alabama, and Wyoming state exchanges will offer only one plan to consumers: Blue Cross Blue Shield.  In Arizona, only one company will offer a plan in every county, with seven counties not having any coverage at all.

The Wall Street Journal reports that 650 counties across the country – mostly rural – will be offering only one Obamacare insurance plan.

So far, more than 650 counties appear on track to have just one insurer on the exchanges in 2017, according to the Kaiser Family Foundation, which is tracking withdrawals as they become public. That would be up from 225 in 2016, when the state of Wyoming, among other areas, already had just one ACA marketplace competitor. Of the counties in jeopardy of having only a single exchange insurer next year, 70% have populations that are mostly rural, said Cynthia Cox, a researcher at the foundation.

Disclosures of new market entries or further pullbacks will change the totals in coming months, Ms. Cox said. Filings in many states aren’t yet public, and insurers can tweak their approaches until September.

Kori Allen, a bookkeeper in Kodiak, Alaska, this year has an exchange plan from Moda Health Plan Inc., which will pull out of the state’s ACA marketplace next year. Ms. Allen, 36 years old, who receives a federal subsidy that helps with her premiums, worries about what will happen when there is only one insurer, Premera Blue Cross, offering exchange products: “It’s going to be a monopoly, basically; ‘here’s the price, take it or leave it.’”

Premera Blue Cross, which had steep losses in Alaska’s exchange last year, said it is committed to the market there. “We have been working very closely with regulators and legislators to establish a long-term solution to make the market more sustainable and attract more insurers to the state,” said a spokeswoman.

The government's hands are tied when it comes to getting insurance carriers to offer coverage.


An Obamacare market with no sellers would leave thousands of enrollees unable to use tax subsidies to buy insurance coverage. And the government doesn't have any particular legal power to cajole carriers into setting up shop in the markets they find undesirable. The most they can do, it turns out, is ask really nicely.

"There is no lever that the government can pull except moral assuaging," says Sabrina Corlette, a research professor at Georgetown's Center on Health Insurance Reforms.

The three markets that currently have one carrier — Alabama, Alaska, and Wyoming — are all largely rural and, in the case of the latter two, sparsely populated states. Wyoming has the smallest population of any state, while Alaska comes in at 48th.

Unitedhealth and Humana have pulled back from several state exchanges, leaving them with few alternatives.  Next year, there may be several states with no insurance coverage at all.

If that happens, the federal government was supposed to have the ability to contract with two carriers who would then offer coverage in all 50 states.  But the program is behind schedule and doesn't appear to be a viable alternative:

There's a section in the health care law — Sec. 1334, to be exact — that does look like the exact type of program that could help in this situation.

Sec. 1334 requires the federal government to contract with two multi-state plans, or MSPs. These MSPs would, in theory, provide coverage in all 50 states. And that would mean every Obamacare enrollee would get some choice of plan.

Building a national plan can be difficult. It means contracting with doctors all across the country. So the law intended for the MSPs to scale up over their first four years. They would have to sell in at least 60 percent of all states in their first year, 70 percent in their second year, 85 percent in the third, and 100 percent in the fourth year.

This year is the fourth year — and the program has fallen behind schedule.

From the get-go, the federal government only found one insurer willing to participate in the MSP program, Blue Cross Blue Shield.

And BCBS hasn't been able to scale up its nationwide coverage as quickly as the law envisioned. In 2016, it sold MSP coverage in 32 states — fewer than half of what the law had envisioned at that point in time.

The problem with coverage goes back to the fundamental problem with Obamacare: too many older, sicker people are signing up and not enough young, healthy people.  As has been constantly pointed out since the passage of the law, this is a recipe for disaster.  It was entirely predictable, even with the mandate that forces everyone to buy insurance. 

The result of fewer healthy people in the pool is that companies are bleeding red ink at an astonishing rate.  Too much is being paid out in benefits, and not enough is being collected in premiums.  It really is that simple, and the various schemes that the Obamacare law came up with to cushion the first few years for insurance companies have not worked as planned, or else Republicans have amended them to pay out less to companies losing money.

Right now, we have a slow-motion meltdown.  But if a few more national companies pull out – and if states don't grant the kind of premium increases being asked by insurers – the likelihood is that the process will snowball and put Obamacare into a messy, expensive death spiral.

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