As employers and consumers prepare for open enrollment for health insurance to begin November 1, Mid-South healthcare professionals consider the effects of decreasing numbers of insurers and payment options.
Since the Affordable Care Act was signed into law in 2010, major insurance providers have posted hundreds of millions of dollars in losses, and experts warn that the trajectory is unsustainable. As a result of these losses, Tennessee has only one statewide provider – BlueCross Blue Shield of Tennessee – on the Obamacare exchange.
Cigna remains available in more than two dozen counties across Tennessee, but United Healthcare recently announced that it is leaving the federal exchange system in Tennessee as part of a dramatic reduction of states where the insurer offers coverage. According to the state Department of Commerce, the move will affect more than 15 percent of those covered by the ACE, or nearly 41,000 Tennesseans.
And Humana recently announced that it is being acquired by Aetna in a $37 billion deal, further consolidating and narrowing insurance choices for consumers and setting up a potentially difficult scenario for healthcare systems and consumers alike.
“It’s a red flag. We’ve already seen litigation over concerns about competition if there is only one provider,” said Keith Anderson, MD, president of the Tennessee Medical Association and a Memphis cardiologist. "What we’re seeing now with the ACA impact is that some companies say they can’t compete and simply exit the market. That will continue to limit competition as companies get out.”
The good news for consumers is that under the ACA, more people are insured and many with pre-existing conditions who were unable to get coverage before now have the chance to get insurance. But the tremendous increase of new customers with significant medical issues has overwhelmed insurers in the exchanges and some are opting to leave markets altogether rather than to incur more losses.
And with those exits, medical professionals worry that their patients will have increasingly narrow, yet more expensive options for coverage.
“Fewer choices means higher costs for patients,” said Yarnell Beatty, general counsel for the TMA. “This is particularly true when their doctors are no longer in the patients’ networks and the cost to see them is higher. Fewer choices also lead to higher deductibles and higher co-pays and increasing costs for patients for their medical care."
Anderson agreed.
“When you effectively eliminate competition, the system becomes one-sided and there’s little if any room for negotiation,” he said. “That lack of negotiation affects reimbursement rates for hospitals and medical practices and results in rising costs.”
But smaller numbers of providers in the exchanges paint only part of the picture. Mergers among insurers may also contribute to increasing costs for hospitals and patients.
A 2015 study (http://www.darkdaily.com/american-medical-associations-study-of-nations-25-largest-health-insurers-indicates-that-biggest-companies-hold-dominant-market-share-in-most-regional-markets-109#axzz4IgaFfl6O) by the American Medical Association of the 25 largest U.S. health insurers revealed that mergers and acquisitions during the last 20 years have contributed to fewer insurers owning greater market share. The largest 25 insurers control more than 65 percent of the market.
“The AMA is greatly concerned that in 41 percent of metropolitan areas, a single health insurer had at least a 50 percent share of the commercial health insurance market,” Dr. Robert Wah, president of the AMA, said in the study. “The dominant market power of big health insurers increases the risk of anti-competitive behavior that harms patients and physicians, and presents a significant barrier to the market success of smaller insurance rivals.”
And in metro markets, the AMA study found a “significant absence of health insurer competition” in more than 70 percent of the areas surveyed.
“From a state perspective, we have to make sure that health plan networks are adequate,” Beatty said. “The challenge is that there are no standards for network adequacy.”
Ilana Graetz, assistant professor in the Department of Preventive Medicine at the University of Tennessee Health Science Center, has studied insurer coverage since the ACA was enacted, and she has conducted extensive research on the legislation. She agreed that more choices will result in better coverage, but also said that more young people need to sign on.
“To be sustainable, the ACA needs more healthy people to enroll, and that may take performing a cost benefit analysis for them to see why it’s worth it,” Graetz said. “Now that the fines are being levied for those who opt not to get covered, they need to realize the value of being insured. That’s something you don’t think about as much when you’re younger and healthier, but an increase in that demographic could significantly affect the ACA in a positive way.”
And that’s where some insurers miscalculated when the ACA was enacted, Graetz said. Some insurers underpriced coverage in the belief that substantially larger numbers of healthy people would sign on, but when that didn’t happen the resulting losses led to higher rates or exiting the exchange markets.
But as the penalties begin to be levied against those without coverage, Graetz believes the program will stabilize.
“The cost of the penalties is going up, and I think that will have a mobilizing effect on the ACA as more young people enroll in it,” she said. “It’s true that costs are rising and the lack of competition right now is troubling, but I don’t see the situation as too dire. It’s still early and I believe that within five years we will see things settle down and reach equilibrium.”
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