Insurers: Obamacare changes needed soon to protect us from losses

Federal regulators on Friday proposed potential solutions to some of the Obamacare problems that led UnitedHealth Group to warn it may exit the health exchanges in 2017, but the government also may make it tougher for insurers to limit the number of doctors and hospitals in their plan networks.

The proposed rule from the Centers for Medicare and Medicaid Services would reduce insurers' administrative costs, maintain fee levels and improve the accuracy of a payment formula designed to minimize insurers' risks when taking on new customers.

"The Obama administration has to stabilize this market if they want there to be an individual insurance market in this country five years from now," says Dan Mendelson, president of consulting firm Avalere Health, which has more than a dozen insurance clients.

Friday's proposal doesn't make clear whether the administration is committed to doing so, Mendelson said, but it does show the administration can act without turning to Congress.

UnitedHealth said Thursday that it expected to lose hundreds of millions of dollars on plans on the Affordable Care Act exchanges in the fourth quarter — a startling admission from the largest insurance company in the U.S.

Aetna had already said it was losing money on the exchanges and Friday joined UnitedHealth in lamenting the financial hit it takes when people enroll during the law's special enrollment periods and then drop their insurance after they receive health services.

Considering disappointing enrollment projections for 2016, numerous special enrollment periods, "risk pools" that pay insurers 13 cents on the dollar of losses and stringent government rules on how they design their plans and set prices, insurers say the ACA can be a truly risky business.

CMS extended enrollment from March 15 to April 30 this year to help consumers avoid having to pay tax penalties for not having insurance.  People facing a variety of other life events, such as losing a job, are also able to enroll outside of open enrollment.

The National Health Council, which represents people with chronic conditions such as diabetes and cancer, had pushed the administration to provide better oversight of the doctor and hospital networks for exchange plans so patients can easily get care — and the proposal does include such a provision. But Mendelson said restrictions on the adequacy of these provider networks might be "difficult for plans to meet."

"We've been very clear with the administration about the serious challenges facing consumers and health plans in this Exchange market," Marilyn Tavenner, CEO of  trade group America's Health Insurance Plans, said in a statement.

Tavenner, who was administrator of CMS until early this year, noted nearly 800,000 consumers had to find other insurance coverage for next year because there wasn't enough money in the program that profitable insurers fund to help offset losses to smaller, less profitable ones. More than half of the 23 non-profit insurance co-ops set up under the ACA had to close.

"When health plans cannot rely on the government to meet its obligations, individuals and families are harmed as a result," said Tavenner. "The administration must act to ensure this program works as intended and consumers are protected."

Insurers were only paid 13% of what they were owed for 2014 plans under this risk program.

Administration officials have been cautious with predictions of how many they expect to sign up on the ACA exchanges this year, which also unnerved insurance companies.

The expected 10 million enrollees by the end of next year is far lower than earlier estimates from the Congressional Budget Office and other groups. With 29 million people still uninsured, getting more people to sign up is "the critical thing going forward," says Sara Collins, vice president for health care coverage at the Commonwealth Fund. As more young people buy insurance "it should improve the risk pool," she says.

UnitedHealth warns it may exit Obamacare plans

Most of the people who remain uninsured are eligible for some premium tax credits, Collins said, but "either they aren't fully understanding the effects of the subsidies or, even with the subsidies, they are viewing it as unaffordable."

CMS is actively marketing the low costs of plans after subsidies are applied. But research from the Robert Wood Johnson Foundation shows people with higher incomes, who are eligible for the lowest tax credits and no cost-sharing assistance, are the least likely to sign up for insurance.

New research out this week from Commonwealth Fund shows far fewer people think their insurance premiums and deductibles — from employer-provided or exchange plans — are affordable than the government does when it defines affordability. About 40% of 2,700 people surveyed said they delay care and prescription refills when they were sick because of high deductibles, Commonwealth found.

Politics, of course, remains another problem when it comes to Obamacare.

"It’s very hard to create stability in a world where half of the Congress is gunning to kill the program," says Mendelson.

Indeed, House Government Oversight and Reform Committee Chairman Jason Chaffetz, R-Utah, and three subcommittee chairmen sent a letter to CMS on Friday asking for documents regarding its oversight of the ACA exchanges and co-ops. The letter questioned the billions in federal funding for the co-ops and exchanges.