Health Insurers Fleeing Markets Across the Country

Since ObamaCare was enacted one year ago, there has been a steady drip-drip-drip of news articles about health insurers leaving the market and people losing their health insurance – long before the destructive law takes full effect. But the trickle is turning into a river with millions of Americans in states across the country learning that their health insurers have withdrawn from the market, making it increasingly difficult to find affordable coverage.

And this is happening despite President Obama’s repeated promises that “If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.”

Senior citizens, children, small and medium-sized employers, and families and individuals trying to buy their own health insurance all are wondering what that empty promise means.

CHILD-ONLY INSURANCE: In June 2010, Health and Human Services Secretary Kathleen Sebelius told health insurers that they must write policies for children under 19, including those with pre-existing conditions, no matter when their parents apply. Rather than face the very real prospect that most parents would wait to buy the coverage when the children had a significant medical condition, many carriers have decided to leave this market altogether.

A new study shows that in 20 states, there are no carriers currently selling child-only plans to new enrollees, and in 34 states, at least one carrier has exited the child-only health insurance market. U.S. Sen. Mike Enzi, whose staff at the Health, Education, Labor, and Pensions Committee conducted the study, said the consequences of her directive are “absolutely devastating” since it “would allow people to buy a policy on the way to the emergency room.”

MEDICARE ADVANTAGE: The law slashes spending on popular private Medicare Advantage plans by $145 billion over 10 years. Total enrollment in Medicare Advantage plans, now at 11 million, will be cut in half over the decade, pushing seniors back into traditional Medicare where they have increasing difficulty finding doctors who will see them.

The Wall Street Journal reported that at least 700,000 beneficiaries across the country are being impacted and forced to find new Medicare coverage arrangements.

Not wanting to face an even larger cascade of lost coverage and growing anger of the important senior vote in the coming election year, Sebelius sent out her annual “call letter” to carriers in February with the surprising news that per capita Medicare Advantage payments will increase by 1.6 percent on average for 2012. That will mean even more draconian cuts in the future — after the elections.

GROUP INSURANCE: Small businesses — those who had the highest hopes for health reform — are among the first to be negatively impacted in the group insurance market as carriers have announced they are leaving certain markets or getting out of the health insurance business entirely.

Principal Financial Group announced last year that it would stop selling health insurance, impacting 840,000 people who receive their insurance through employers served by Principal Financial. The company assessed its ability to compete in the new environment created by ObamaCare and concluded its best course was to stop selling health insurance policies.

Citizens in states around the country also have learned that carriers are exiting markets there, largely as a consequence of the combined effect of the health law and state regulations that make it particularly difficult to offer coverage in the small group market.

This is a negative and destructive trend, leaving fewer carriers to serve these markets and giving small businesses and hard-working insurance agents who serve them less leverage to negotiate better benefits and competitive rates.

INDIVIDUAL INSURANCE: Sebelius refused to listen to the carriers when they asked her to delay for at least a year the “minimum medical loss ratio” (MLR) regulations she imposed on January 1. The MLR rules require insurance companies to spend at least 80 percent of premiums in individual and small-group markets and 85 percent in the large-group market on medical claims. If an insurer is unable to meet those targets, it must rebate the difference to consumers.

For small companies that sell policies to individuals, the test is extremely hard to meet.

It is no wonder that the percentage of people who want to see the law repealed and replaced with more sensible reforms remains high, and will grow as more and more people discover the impact of the new law.

Published on Health Reform Report, March 17, 2011.

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