Obamacare is in better shape than you think
UnitedHealth (UNH), the nation’s biggest insurer, just announced it will pull out of most Obamacare markets it operates in, because it’s losing money. Investors applauded, sending the company’s shares up on the news. And that comes shortly after the Congressional Budget Office sharply lowered its estimate of the number of Americans likely to be covered under the ACA this year.
Opponents of the ACA warned that more insurers could follow UnitedHealth out the door, possibly imperiling the whole program. “Americans are realizing that government-run health care is leaving them with fewer choices and higher costs,” the conservative nonprofit group Freedom Partners declared. “It’s time to reverse course on this reckless experiment before more people are harmed.”
But the ACA has survived many challenges so far, and it will certainly survive the departure of one carrier. By some measures, in fact, Obamacare is becoming more popular and more efficient, even as Americans everywhere continue to struggle with rising healthcare costs and access to doctors.
Even though it’s the nation’s biggest health insurer, UnitedHealth was a latecomer to the ACA and never committed to many of the markets it served the way other insurers did. The company, for instance, covered fewer than 1,000 patients in Massachusetts, one of the markets it’s leaving. “To get less than 1,000 members in a state like Massachusetts is pretty ridiculous,” says Jeffrey Loo, a healthcare analyst at S&P Capital IQ. “Leaving the ACA will benefit UnitedHealth’s bottom line, but for the ACA it’s relatively immaterial.”
The Kaiser Family Foundation analyzed the impact of UnitedHealth’s departure, and found that there would be less competition in perhaps one-third of the markets covered by an ACA healthcare exchange. That’s bad for consumers, because it’s easier to raise premiums when there are fewer companies offering insurance. But Kaiser also found that UnitedHealth didn’t push down premiums by much when it entered those markets, partly because of the types of policies it chose to offer and also because of fairly low market share. Overall, UnitedHealth covers only about 6% of people who have insurance under the ACA.
It’s also likely other insurers will step into some of the markets UnitedHealth is leaving, especially those that are more heavily populated and therefore more profitable. Cigna (CI) says it plans to expand its ACA offerings. Aetna (AET), Anthem (ANTM), Humana (HUM) and Blue Cross/Blue Shield have no plans to leave. The end result may be fewer carriers and higher premiums in some less populous rural areas, which is often the case in the private market for insurance as well.
Meanwhile, beneath the turbulence, the ACA has been slowly gaining more acceptance. One new study published in Health Affairs found notable changes in the way Americans view the law since it was first passed in 2010. While still unpopular overall, fewer people worry about it disrupting their own healthcare and more feel the law has actually done some good. And the portion of Americans favoring repeal is declining. “The ACA has delivered discernible benefits,” the study concludes, “and some Americans are increasingly recognizing that it is improving access to health insurance and medical care.” Here’s a snapshot of the findings: