A fundamental misunderstanding of competitive markets has lead to health care insurance providers pulling out of the Obamacare exchanges, leaving consumers in a bind and contributing to the dismal state of the Affordable Care Act (ACA), according to a Republican North Carolina congressional representative.
"It's the state of the Unaffordable Care Act," Rep. Robert Pittenger recently told Patient Daily. "Let's be real. There's nothing affordable about it. Premiums have gone up, deductions have gone up and health care is less accessible. Other than that, it's a great success."
Pittenger made his comments only days after Aetna announced that it would stop offering individual coverage under the Affordable Care Act in 11 of the 15 states where the company currently participates, starting in 2017. The insurance giant faces hundreds of millions of dollars in losses because of its involvement in Obamacare, which has lead to the business decision to pull out, Aetna Chairman and CEO Mark Bertolini said in a press release announcing the decision.
States Aetna is expected to pull out of include North Carolina, in addition to Arizona, Pennsylvania and Florida, but it will continue to sell plans on state exchanges in Iowa, Delaware, Nebraska and Virginia.
Meanwhile, consumers across the country can expect substantial premium increases as health care insurance providers try to combat those losses. A recent Kaiser Family Foundation report illustrates those issues in at least part of the country. While a handful of cities in some states will see a decrease in premiums, including Providence, Rhode Island, where a 14 percent reduction is expected in the lowest-cost silver premiums, most will see dramatic increases, according to the report. Nashville, Tennessee, which saw a 19 percent increase in the lowest-cost silver premiums in 2016, can look forward to a 27 percent increase in 2017. Denver, Colorado, which experienced a 29 percent increase for the same level of premiums in 2016, will see a 14 percent increase next year, according to the report.
Pittenger said he isn't surprised that the ACA, also known as Obamacare, is struggling.
"It's not a surprise to anybody who understands the markets," he said. "It was a failed business model from the very beginning to have the government as the arbiter for health insurance. For consumers, in open and competitive markets, this does not provide for lower costs and better services. So this was no surprise in the actuary or for anybody who understands basic market principles."
Targeting certain consumers to shore up the program was an especially flawed idea, Pittenger said.
"When it's dependent upon young people participating and supporting an aging population with extraordinarily high health care costs, that's not sustainable," he said.
As it was set up originally, health insurance providers relied on a sort of backstop to shore up their profits; however, that backstop was removed from the Omnibus, the spending bills that make up the federal budget, Pittinger said.
"They were going to have taxpayers back up their losses," he said. "We negotiated that into the Omnibus. And when that came out, that put them into a position of suffering these enormous losses. We wanted to protect the taxpayers."
However, even that comes back to market fundamentals, Pittinger believes.
"If you're going to have a health care plan, it needs to be market sustainable," he said. "And it's not. It never was going to be. The foolhardy people who thought it was going to work have seen it, in effect, be counter-effective."
His proposed fix is to pursue the reverse of what he said the ACA currently pursues.
"We need now to put our focus on open competitive markets," he said. "That's what Republicans are all about."
Whether Democrats will buy into that is another story, Pittinger added.
"You know, I always hope for that," he said. "I sit on Financial Services and we watched the absolutely anemic economic growth that is totally impacted by the high regulatory burden on the financial industry. You would think they would wake up. But I hope there are some thoughtful people who will look at the numbers and say 'Socialism doesn't work.' Some of them still want to force this as a single-payer, but that will be even worse."
