You may have heard that big for-profit health insurers are taking a “wait-and-see” attitude toward the Exchanges –the one-stop marketplaces where small businesses and individuals who don’t receive benefits at work will be able to buy insurance.
Both UnitedHealthGroup, the nation’s largest carrier, and Aetna the third-largest, have told analysts that their involvement in the health insurance marketplaces across the country will depend on whether they find them “financially viable” for the companies WellPoint, Humana and Cigna also have indicated that they will participate in a “limited” number of markets. /
Aetna is being particularly coy. On a conference call with investors and analysts just three weeks ago Aetna officials said that if they don’t like the way the market is shaping up they “might pull their products from the online marketplaces at the last minute.”
Is this meant as a threat? One can only imagine the chaos that would ensue if Aetna began pulling out of state Exchanges at the 11th hour. The remark demonstrates how little concern Aetna has for its customers.
Doomsters say Too Few Plans Will Mean Higher Premiums
Many have been predicting that the Exchanges will fail because the big names won’t be participating. They point out that in Illinois “only six insurance carriers have told the state of they want to sell health policies on the state’s online s marketplace. “ The critics warn that if not enough companies offer coverage in the Exchanges, consumers won’t have enough choices, and their won’t be enough competition to keep a lid on prices.
Former insurance executive turned industry consultant Robert Laszewski is quick to pounce on “the Illinois numbers” as “an early indicator that insurance companies are backing away from full participation in the online marketplaces. . . I’m hearing that from other carriers in other parts of the country as well” he told Chicago’s Crain’s Business. “They are terribly fearful that if there’s a poor launch (of the marketplaces) they’re going to get blamed for a mess.”
Laszewski has been predicting “sticker shock” in the Exchanges for some time. What he ignores is that what matters most is not the number of plans available in the Exchanges, but how good they are. Quality, not quantity is what counts.
In the end, “robust competition” does not depend on the free-market chaos of 20 or 25 plans vying for market share. It turns on a few good companies offering transparent information. Then, and only then, can consumers compare them and make rational decisions.
California Disproves the Critics
California already has demonstrated that the doomsters are wrong. Two days ago, the state unveiled the offerings that will be available in its Exchanges—along with the prices. Nearly three dozen plans had submitted bids, and 13 were selected. (California exchange officials rejected bids that were too expensive, or failed to include enough choices of doctors and hospitals.)
Sure enough, the brand name for-profits are not going to peddle their products in the California Exchange.
But as it turns out, they weren’t needed to create a competitive affordable market that offers Exchange customers a wide range of choices. As I discuss below, Kaiser, which ranks #1 in the state for both quality and consumer satisfaction will be part of that marketplace.
In every region in the state, individuals who don’t have health benefits at work will be able to purchase comprehensive insurance that offers free preventive care, covers the 10 essential benefits, and caps out-of-pocket spending for less than $4,000 a year. (In North Los Angeles County, for example, Kaiser will offer a Silver Plan for just $294 a month.) This is significantly lower than expected: the Congressional Budget Office (CBO) had estimated that such comprehensive coverage would cost $5200.
Four thousand dollars might sound pricey for a middle-class family, but keep in mind that individuals reporting modified adjusted gross income (the number at the bottom of the first page of your tax return) of less than $45,960, as well as families earning as much as $94, 200 will be eligible for federal subsidies that will help them cover their premiums.