Millions will have to shop around for health insurance this year

Health Insurance

August 31, 2016

There is no denying that the Affordable Care Act has been a challenge for all parties involved. Unfortunately for the American public, those challenges are about to get bigger.

Every year around re-enrollment time, insurance advisors tell people to start shopping around for better and more affordable policies. Some people have no choice but to shop around because of changes in the policies of their carrier. Those that fail to look for a new policy will be rerouted to a similar plan within the same carrier. Simple right? Not anymore. Since the enactment of the Affordable Care Act, carriers are not just changing their policies, they are leaving. This year the trend of insurance providers exiting the market will throw the Affordable Care Act into new levels of uncertainty as three major carriers drop out.

So far, the three big drop outs of 2016 are Aetna, Humana and United Healthcare. These three carriers alone will displace an estimated 1.6 million people. Add that number to the smaller carriers pulling out and the number jumps to 1.9 million. While it is unclear if the people affected will be rerouted to other insurance carriers or if they will be left to their own devices, one thing seems crystal clear. Nearly 2 million people are facing the possibility of being uninsured.

Why are so many insurance companies leaving? The short answer is cost. The individual mandate requires that insurance must cover people with pre-existing conditions. Often times, these conditions are expensive to cover. Especially considering that many of these individuals previously had no insurance which requires them to seek medical care beyond maintenance and treatment of their condition. With lower enrollment rates of younger, healthier Americans to offset the cost, insurance companies are finding it too expensive to stay in the game. Pair the mandate with the congressional provisions making it impossible to redistribute wealth within the Affordable Care Act, as per the original bill, and the carriers just can’t stay afloat.

The result of all of this confusion and flailing about is that the average American consumer is staying away from the Affordable Care Act all together. By choosing to enroll in short term policies outside of the Affordable Care Act, people are able to receive more affordable coverage, even after paying the fine for not using the program.

For some, finding healthcare outside of the Affordable Care Act is simply not a possibility. With more and more carriers leaving, Americans who need the ACA are facing the likelihood of having only one option for their health insurance needs. In fact, by 2017, 650 counties across the U.S. will have only one offering through the ACA program. This prospect is creating fears among some that the price will be unaffordable, and given that there are no other options, they will have to pay up or go back to being uninsured.

However, all hope within the Affordable Care Act is not lost. While the program is currently unsteady, the likelihood that it will fail completely is slim. There are some insurance carriers who are actually making money in the program. By restricting their offerings and limiting their in network doctors and hospitals, these carriers have actually been able to turn a profit. In addition, they hope to expand their offerings and the areas in which they offer coverage. Many believe this is why the major carriers are failing. Their business model is concentrated around the employer market which expects more options and less control. Once they figure out how to handle the individual coverage market it’s not out of the question that they will reenter the Affordable Care Act marketplace.

Unfortunately, it is unlikely that the Affordable Care Act program will stabilize on its own. Many are calling for the involvement of the government to help stabilize the risk pools. The issue is how? Some suggest increasing the amount of fines payable by those who do not obtain insurance through the ACA program, while others suggest increasing the subsidies thereby making it more affordable to obtain insurance through the Affordable Care Act.

Regardless of your personal feelings for the Affordable Care Act and how it came to be, there is no denying that individual Americans and health insurers are both suffering from the instability of the ACA. One group simply needs health insurance and the other simply needs to make enough money to stay in business. It is a given that the government will continue to stay involved in an effort to right the ship. It is the “how” that remains to been seen.