When the health insurance startup Oscar lost $92 million selling policies on New York’s insurance exchange last year, CEO Mario Schlosser could have joined the insurance executives blaming Obamacare for their companies’ struggles. Instead, he changed his business model.
Out went Oscar’s original New York model of selling traditional insurance — with access to nearly every doctor and hospital in town — to individual customers via the Affordable Care Act’s online marketplace. In came “narrow networks” that offer customers less choice but lower prices. Schlosser believes the new approach will make the company’s offerings more attractive to customers — and more profitable for investors.
Recent weeks have brought a storm of questions about whether the health insurance exchange system at the heart of President Obama’s signature health law is already unraveling amid defections by major insurers. But as Oscar’s decision illustrates, the true picture is more nuanced.
A federal watchdog has found security flaws in state-run ObamaCare exchanges in California, Kentucky and Vermont, potentially putting millions of customers’ data at risk.
The three states were found to have cybersecurity weaknesses such as insufficient encryption and inadequate firewalls, according to a months-long study by the Government Accountability Office.
California’s system, known as Covered California, is the nation’s largest state-run exchange. Both California and Kentucky have been touted as a national model, though Vermont has had a documented history of issues with its exchange.
UnitedHealth (UNH), which is weighing an exit from the Obamacare exchanges, reported it lost about $475 million on Obamacare-compliant plans in 2015 and expects to lose more than $500 million this year.
The insurer, the parent company of United Healthcare, ended last year with about 500,000 enrollees in Obamacare exchange plans.
The company expects that number to grow towards 800,000 during the 2016 open enrollment period, which ends Jan. 31, before dropping again as some members get jobs, stop paying premiums or find insurance elsewhere. (Also in 2015, it had about 150,000 enrollees who signed up outside the exchanges for individual policies that are compliant with Obamacare.)
If the Affordable Carte Act were a building, it could be described as showing signs of structural deficiencies. The Daily Caller in an article by Rachel Stoltzfoos (online 5/4) cites observations by Avik Roy of the conservative Manhattan Institute. According to the Daily Caller, Roy recently told USA Today, “Without an economic incentive to avoid the ER and a shortage of primary care doctors who accept Medicaid, the increase in ER visits is bound to continue.”
Stoltzfoos’ report compellingly adds, “Almost half of the insurance exchanges set up by states are struggling financially, forcing officials to consider turning the exchanges over to the federal government. And most doctors are reporting an unsustainable surge in ER visits, contrary to the law’s intent.”
Some U.S. states have purportedly received some $5 billion – – comprised of federal grants. They must now “cover their operating costs, and many may be forced to drop their marketplace in exchange for the federally operated HealthCare.gov,” this is also according to the Daily Caller.
Jim Wadleigh, who is the executive director of Connecticut’s state healthcare marketplace, says the bill for that could cost as “$10 million per exchange.” Wadleigh recently shared that assessment with the Washington Post, according to The Daily Caller.
Other troubling Obamacare signs of faltering include:
The 2014 deadline is approaching for states to establish healthcare exchanges as mandated by ObamaCare. Last year, The New American chronicled not only the crescendo of popular opposition to the President’s healthcare act, but also the statements of several Republican governors refusing to implement the government-run medical care plan in their states. Now many GOP Governors are relenting.