Aetna Withdrawal Heightens Concerns for ACA
August 22, 2016 03:17 PM
Aetna’s decision to drastically reduce its participation in the Affordable Care Act’s individual markets in 2017 has shaken public confidence in the Act, putting health care back into the middle of the political scene in an election year and setting the stage for a future battle over improving the law or scrapping it altogether.
Aetna became the third major insurer to cut back its commitment to state marketplaces since April, following on the heels of United HealthCare and Humana. Last April Aetna expressed optimism about the exchanges, but has now reversed course, citing a second quarter pre-tax loss of $200 million due to higher than projected medical costs.
Impatience with losses appears to make legislative and/or regulatory fixes to the ACA inevitable. What that perfecting legislation might look like is unclear at this time, due to fierce partisan disagreement and the uncertainty of a volatile election season. Little or no action is expected before the November general election.
Republicans have long favored a complete repeal of the ACA and replacement of the law with an alternative. Democrats remain staunchly protective of the ACA, with some, emboldened by the campaign of Senator Bernie Sanders [D-VT], calling for a public option or expansion of Medicare to cover the entire country. President Obama has proposed creating public health plans in areas where competition is scarce.
Compromise legislation would require the GOP to abandon its repeal-or-bust stance toward the ACA and Democrats might have to abandon their push for public plans. A victory by Donald Trump in the November election would call into question the existence of the ACA, but a victory by Democrat Hillary Clinton, currently holding a healthy lead in the polls, would increase the odds of a “grand bargain” being struck. Should Clinton prevail in the election, the scale of her victory would also be important. The Republicans currently enjoy a 54-46 advantage in the U.S. Senate, but Las Vegas odds makers now predict the election will flip control to the Democrats. Clinton’s hand with Republicans would be strengthened with her allies in control of the Senate. It is believed the House of Representatives is almost certain to remain under Republican control in 2017.
Republicans would like to see states given more flexibility in designing market-based approaches to make coverage more affordable, with less public spending, in exchange for covering low income people in states without Medicare expansion.
Changes to the employer mandate, never popular with Republicans and almost universally opposed by the home care and hospice community, are also possible. The exchanges need more people to enroll -- particularly healthy people -- but employers are continuing to cover millions of employees, keeping them out of the exchanges. Relieving the employer mandate burden on companies might fulfill a key Republican goal while simultaneously enabling the exchanges to sign up millions of healthy new customers.
Some Democrats have considered the possibility of requiring insurers to offer exchange products as a condition for participating in Medicare Advantage or Medicaid managed care, something insurers oppose.
The home care and hospice industry has paid the costs under the ACA, but so far received few benefits. Today, some 90 percent of Medicare costs relate to the management of chronic disease; yet Medicare is still geared to acute illness, something that Senate Finance Committee Chairman Orrin Hatch (R-UT) and ranking Democrat Ron Wyden (D-OR) are determined to change. This would be very good new to the home care community.
With profit margins tight or non-existent in many of the insurance marketplaces, providing home care instead of far costlier hospitalization remains an obvious way to reduce costs and not only preserve the Affordable Care Act, but spread its benefits to many who continue to be under-served.