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Will Health Insurance Exchange Remain Intact Despite Hurdles?

The budget reconciliation bill is not the only obstacle standing in the way of the health insurance exchange and its future.

- What will happen to the health insurance exchange created by the Patient Protection and Affordable Care Act? Will it continue on as originally planned by the Obama administration? Or will new legislation and the decisions of insurance companies leave the health insurance exchange in the dust?

Patient Protection and Affordable Care Act

How the budget reconciliation bill impacts Obamacare

Last week, the United States Senate passed the budget reconciliation bill in a vote of 52 to 47. While President Barack Obama is expected to veto the bill, the Senate passage of the bill shows that many within the federal government do not approve of the health insurance exchange, Medicaid expansion, rise in taxes, and other provisions of the Affordable Care Act.

“This appalling legislation guts the ACA, the greatest advance for women’s health in a generation,” Debra L. Ness, President of the National Partnership for Women & Families, said in a public statement.

“It would repeal Medicaid expansion, blocking millions more people from getting the health care they need. It would defund Planned Parenthood, denying millions of women high-quality preventive care, including birth control, cancer screenings, screenings and treatment for sexually transmitted infections, and abortion care.”

In particular, the legislation will curb the subsidies offered to individuals who are unable to afford healthcare coverage plans on the health insurance exchange. If such a bill was made law, it would drastically harm the health insurance exchange by eliminating the federal government’s right to run these exchanges and offer subsidies to low-income individuals and families.

Will UnitedHealthcare leaving the exchanges impact other insurers?

However, the budget reconciliation bill is not the only obstacle standing in the way of the health insurance exchange and its future. UnitedHealth Group Inc., a major payer within the health insurance industry, announced last month in a company press release that it is considering moving its plans out of the federal and state health insurance exchanges.

Currently, the payer has decided it will not be taking on marketing of their individual exchange plans next year. Additionally, it may drop out of offering plans on the health insurance exchange in 2017.

When it comes to claims management and reimbursement, UnitedHealthcare determined that there were too many negative risks, profit loss, and financial implications in selling individual plans on the exchange.

“It was for us a bad decision,” UnitedHealth CEO Stephen Hemsley stated at an investor meeting. “I take accountability for sitting out the exchange market in year one so we could in theory observe, learn and see how the market experience would develop. This was a prudent going-in position. In retrospect, we should have stayed out longer.”

The losses from selling plans on the health insurance exchange has landed the company with a quarter of a billion dollars in losses this year and the same projection is expected for 2016 as well. Having a major player like UnitedHealthcare leave the health insurance exchanges could potentially have a negative impact on the actions of other insurers taking part in the exchange.

If other insurers find that there are no significant gains and instead potential financial losses from participating in the exchanges, they may also consider moving away from this healthcare coverage model.

One man's opinion on the future of the health insurance exchange

Merrill Matthews, a resident scholar at the Institute for Policy Innovation, discussed in an interview how UnitedHealthcare’s move away from the exchanges could affect the decisions of other insurers as well as the future of the Affordable Care Act.

Matthews mentioned that other insurers did come out and state their plan to continue offering coverage through the exchanges. However, there is concern that a “death spiral” could take place and essentially destroy the majority of the federal health insurance exchange, according to Matthews.

“Several insurers came out and said that they’re still committed to being here, but it might indicate the death spiral that we’re concerned about in the exchanges,” he stated. “There’s been a long-running concern that what the exchanges will ultimately be is the place where the people who are the sickest and need subsidies from the federal government will reside.”

“The question comes about – would even some of those people be able to buy cheaper insurance even considering the subsidies outside of the exchange if a death spiral initiates. If so, does that ultimately make the exchanges unworkable?”

Nonetheless, Matthews does admit that the health insurance exchanges have brought more access to healthcare services among the American population. However, a major reason for this comes from the subsidies offered to those within the public who are unable to afford certain healthcare coverage plans.

The representative of the Institute for Policy Innovation further explained how the subsidies may be one of the few things keeping the health insurance exchange “alive,” as approximately 85 percent of the people purchasing insurance through this marketplace are proffered subsidies.

“When it comes to whether or not it [the health insurance exchange] has created greater access to care, the answer to that is a qualified yes, but qualified only because there are subsidies there that help people who have trouble paying for health insurance get health insurance,” Matthews explained.

Dr. Matthews predicts that the costs of the plans within the exchange will become very expensive and we may see the remaining 15 percent purchasing insurance through other means. However, the exchanges themselves have not had a real impact on the costs of health insurance premiums and other aspects of healthcare costs.

Only the future will show what will actually come of the federal and state health insurance exchanges. Time will show the actions of other insurers and their participation in the marketplace. While Obama remains President, it is unlikely that any legislation will be able to eliminate important aspects of the Affordable Care Act. However, future presidential candidates may change the law and develop other healthcare reforms.

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