…and Why We Need It Now
Remember the big debate in the Congress about whether or not the ACA needed to create a public option to private insurance in order to make the new exchanges be competitive and serve all consumers. This proposal was defeated and left to die pretty much without a whimper.
Now we are just beginning to get a look at the participation of insurance companies in the new exchanges and are seeing why the public option was so important.
One of the supposed benefits of these exchanges is that there will be lots of competition among private insurance companies and a public option was simply unnecessary.
Most states will have a federally run exchanges and the White House is being fairly optimistic about participation. The Administration has announced that there will be about 120 companies participating in the federal exchanges and that 90% of insurance consumers will have five or more plans to choose from.
The Blues (Cross and Shield) have indicated a commitment to move into exchange markets vigorously.
So far so good.
Then the news comes that UnitedHealth, the country’s largest health care insurer, will not be entering the California exchange. Neither will Aetna and Cigna. They will compete with the exchange for customers because they will still sell insurance in California, just not in the exchange
The Blues, for all their commitment to the exchanges, have now announced that they will not sell in the exchanges in Mississippi, Iowa or North Dakota.
Only two companies will participate in the North Carolina individual market exchange and only one insurer will offer in their SHOP exchange.
Last month we learned that SHOP exchange products will be available in only 5 counties in Washington State. The 34 counties where there will be no insurer include the Seattle, Tacoma and Spokane metropolitan areas, the bulk of the state’s small business areas.
Well, won’t there still be insurance people can buy in these areas? There will, but the customers will not be eligible for the ACA premium subsidies or small business tax credits. Those can only come when products are bought inside the exchanges.
So poor consumers or small businesses will still not be able to afford insurance in these areas because they cannot get subsidies that everyone else will get.
Here’s an example of how it will work. The decision of the Blues to stay out of the exchange in Mississippi, for example, means that health consumers in 36 out of 82 counties in Mississippi will not be able to get premium subsidies under the new exchange. This is not because they are not eligible for them. It’s not because they are not available. It’s because the insurance companies have the freedom to stay out and there is no public option to fill the gap.
In the next few months the picture will be even clearer as enrollments open October 1st but some consumers are going to get nothing.
In the next month or so we will begin to see big gaps in the infrastructure. This will be even more problematic in states where they have decided not to expand Medicaid.
A public option in an exchange would have been the very driver of competition among private health plans. Without incentive, and a million ways to work around the ACA implementation, private insurers still have the run on a market of exclusion.
There are policy responses that can be tried. Nothing prevents a state from creating its own public option.
At least one state, Maryland, requires carriers with state market share above a certain threshold to sell a qualified health plan in their exchange.
Other states should follow suit. But, let’s face it, states with weak laws or federal default exchanges are not likely to have the political will to take these extra measures and their consumers are simply going to go without insurance.