Feds say ACA working despite insurers' exodus from exchange

The U.S. Department of Health and Human Services sought to reassure a worried and sometimes disgruntled public on Wednesday, insisting there will still be a robust selection of affordable health insurance plans next year on the federal exchange despite the recent defections by major insurers.

Just last week Aetna said it would no longer be offering plans on the Affordable Care Act's exchange next year in 11 states, including Texas. That was followed by the announced pullout from the exchange by a large regional Texas carrier, Scott & White Health Plan, and the confirmation by the Texas Department of Insurance that Humana appeared to be leaving some counties, including Harris County, where it previously offered coverage.

Cigna also told the Houston Chronicle it was "in discussions with the Texas Department of Insurance to not participate" on the exchange next year in the state, and Oscar, a newcomer that offered plans in selected Texas cities, announced Tuesday it is pulling out of the exchange in the Dallas-Fort Worth market due to "uncertainty."

This all comes on the heels of UnitedHealthCare's announcement in April it would not be offering exchange plans in Texas next year because of losses on individual plans on the exchange.

The insurance industry, initially a backer of the health-care law known as Obamacare, has soured on it lately, complaining that enrollees have been sicker and used more health care than anticipated, driving the losses. Prior to the ACA, insurance companies were not required to cover people with pre-existing or chronic conditions and could charge people more based on their medical status.

During a call to reporters across the nation Wednesday, Kathryn Martin, acting assistant Health and Human Services secretary for planning and evaluation, brushed aside the significance of the rapid exit of insurers from the exchange as well as mounting reports of large rate increase requests from some of the carriers who remain.

Blue Cross and Blue Shield of Texas, the state's largest insurer, has asked for nearly 60 percent rate hikes in three of its exchange plans for next year.

"Headline rate increases do not reflect what consumers actually pay," Martin said, referring to the federal tax credits that the majority of those who sign up on the exchange receive to lower premium costs. "Our study shows that even in a scenario where all plans saw double-digit rate increases the vast majority of consumers would continue to have affordable options."

She emphasized that tax credits go up along with premiums and said the majority of consumers on the exchange will qualify for assistance. Calculations for the tax credit are figured according to a benchmark price of the second-lowest-cost silver plan.

In a separate statement Wednesday, the government agency said its analysis of the Texas market showed that 80 percent of Texans enrolled through healthcare.gov should be able to get a plan for less than $75 per month despite double-digit rate increases.

Only one insurer available

But insurance brokers like Kelly Fristoe in Wichita Falls, who serve rural and small-town customers, says the problem goes deeper than just the numbers in a proposed rate increase.

"When there's only one insurance company available it tends to put the insurance company in a much higher level of control," Fristoe said. "They will have the upper hand when it comes to controlling the premiums and premium increases. It also gives them the upper hand in controlling reimbursements and network providers. It will be, Take it or leave it."

He worries that if the insurer no longer needs to competitively negotiate with providers it will be free to offer lower reimbursement rates. That, in turn, could drive doctors and hospitals to stop accepting patients with exchange plans, a move that ultimately would impact access to care.

A new analysis by the Center for Public Policy Priorities in Austin shows with the exit of Aetna, UnitedHealthcare and Scott & White, insurer Blue Cross and Blue Shield next year will be the only carrier in 85 Texas counties - more than a third of the total.

"It's definitely a concern for Texas consumers," said Stacey Pogue, a senior policy analyst for the think tank.

On Wednesday, Health and Human Services officials urged people to vigorously shop and compare plans once the exchange for 2017 opens in November in order to find coverage that meets their medical needs and their budgets.

That will be difficult if there is little or no competition - a concern that looms large not only in Texas but across the nation.

Last week, Avalere, a leading national health care consultant, released a report that showed 36 percent of exchange markets across the country will have only one insurer in 2017. In 2016 it was just 4 percent.

"It is worrisome," said Chris Sloan, a senior manager of policy for Avalere. "Choice is a big part of the Affordable Care Act."

There could be pockets of the country where no insurer offers plans on the exchange.

"There is no provision in the ACA for that eventuality," he said.

Oil bust affects middle class

Policy watchers said it is accurate that those with federal subsidies and tax credits will be mostly insulated from the rate increases and lack of competition.

It is less clear what will happen for those who do not qualify for relief.

Under the law, the poor and working poor were to have been covered by states expanding existing Medicaid programs. If they made more, premiums would be lowered through the tax credits.

But in 2012 the U.S. Supreme Court ruled that states could choose if they wanted to expand Medicaid. Texas and 18 other states did not, opening a coverage gap for more than three-quarters of a million Texans who make too much money for the state's strict Medicaid threshold but not enough to get a subsidy. They must foot the entire insurance bill - something many say they cannot afford.

On the other end of the income scale, the oil downturn has exposed another gap as thousands of laid off middle- and upper-middle-class people. These folks also make too much money to qualify for subsidies, but they also say they cannot afford to buy policies out of pocket.

HHS officials Wednesday pointed to successes of the health-care law as the uninsured rate in the nation has reached a historic low and more than 20 million people have obtained insurance since the rollout three years ago. More than 1 million Texans got insurance from the exchange last year and the uninsured rate has dropped to about 17 percent.

"It is important to step back and remember what insurance was like before the Affordable care Act," said Dr. Mandy Cohen, chief operating officer and chief of staff for the Centers for Medicare and Medicaid Services, which oversees the exchanges.

Cohen said pessimism for next year is misplaced.

"It's always the folks that are leaving that get the headlines," she said.

Still, the reassurances were met with skepticism as reporters from across the country told of narrowing networks that left patients scrambling to find providers who accepted their plans, and how the departure of insurers left many people with no chance to shop around for more suitable or cheaper plans.