News that UnitedHealth Group, the nation’s largest commercial insurer, is withdrawing from the Affordable Care Act’s state exchanges because it can’t make enough money on them, has set off the latest round of gloom-and-doom predictions for Obamacare. Predictably, this rendering of failure, like all the others, is coming from opponents of the 2010 law that has made health insurance available to millions of Americans who otherwise may never have had an opportunity to purchase it.
This was the message in the Washington Post Tuesday from a fellow at the American Enterprise Institute. https://www.washingtonpost.com/opinions/obamacare-disaster-will-be-obamas-enduring-domestic-legacy/2016/04/25/a8c09b38-0ae4-11e6-8ab8-9ad050f76d7d_story.html
It’s worth noting that the big insurance firm’s decision to get out of the ACA marketplace is not good news for Americans living in rural areas who rely on the insurance exchanges to get individual coverage. Indeed, in those sparsely populated areas of the South and West UH’s withdrawal will likely lead to fewer choices for many residents who can only afford what’s available on the government-subsidized exchanges.
But a little perspective about the company’s decision is needed as well. And when examined more closely, the Obamacare-is-destined-to-fail scenario of opponents is once again shown to be wishful-but-unhelpful thinking.
Here’s one of the better analyses I’ve seen of it — offered by a columnist and blogger for The Los Angeles Times. http://www.latimes.com/business/hiltzik/la-fi-united-obamacare-20160419-snap-htmlstory.html
Digging deeper into these developments as Obamacare evolves is extremely important because most Americans have little understanding how the health insurance marketplace works. As such they can be easily misled — and, as recently shown, lied to — about what’s happening and why.
I’m certain that many readers reacted with alarm when they heard the news last week that UnitedHealth was going to ditch its ACA exchange plans,. I’m willing to bet that most didn’t know that the company’s decisions does not impact the plans it offers to consumers through coverage they get on the job, or through an employee retirement plan or its large and profitable Medicare Advantage plans. Nor were critics quick to point this out because in their world any tremor in the health insurance force is ALWAYS a direct result of Obamacare, even when it isn’t.
In reality, the decision is limited to those plans the company was offering through the individual market exchanges, an arena UnitedHealth reluctantly joined in the first place, And even then, it declined to create low-cost premium/high deductible coverage plans in many markets. That one decision clearly put the company in competitive disadvantage with companies that were more than willing to jump into that part of the individual market, which we know now is the most popular with consumers. (Whether that tier of coverage is a good thing — it may be affordable, but is it really helpful? — is a much different topic and remains one of the most important policy questions remaining to be answered in the first years of the ACA.)
Indeed, the evolution of the insurance market after the ACA seems to be shaking out pretty much as the experts who promoted it in 2010 said it would. Millions of Americans who were screened out of the market before the ACA because of pre-existing medical conditions can now get insurance. Others, thanks to the individual mandate and subsidies, can afford coverage for the first time. And yes, some who had individual coverage in the past that they paid out of their own pockets have had to purchase new policies on the exchanges, a disruptive process that critics unconvincingly exploited as the beginning of the end of Obamacare. In reality, many of these consumers also qualify for subsidies now to help them afford better plans than they had in the first place.
And lastly, the American-revered concept of for-profit, commercial health insurance survives, even as the government plays an important role in helping make insurance more affordable and comprehensive. UnitedHealth is still a hugely profitable enterprise. It still offers employers and retirees and others in large-group markets a range of coverage options. It has simply decided to get out of the individual market because it wasn’t making enough money in it.
Too bad for them. Buh-bye.
Mike King is the author of “A Spirit of Charity: Restoring the Bond between America and Its Public Hospitals.” Advance ebook sales are available online through Amazon. The book will be available for full release May 31, 2016