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Instability in Marketplaces Draws Concern on Both Sides of Health Law

THE NEW YORK TIMES
http://www.nytimes.com/2015/11/28/us/politics/instability-in-marketplaces-draws-concern-on-both-sides-of-health-law.html

WASHINGTON — The latest turmoil in health insurance marketplaces created by the Affordable Care Act has emboldened advocates on both sides of the political spectrum, providing ammunition to conservatives who want to shrink the federal role and liberals who want to expand it.

UnitedHealth Group rattled federal officials when it announced last week that it was losing money in the insurance exchanges, saw no reason to expect improvements in 2016 and might pull out in 2017. Those concerns followed the collapse of 12 of the 23 nonprofit insurance cooperatives created with federal loans under the health law.

In addition, insurance markets in many states are unstable. Premiums are volatile. Insurers say their new customers have been sicker than expected. And the law is as divisive as ever. In the latest poll by the Kaiser Family Foundation, people reporting unfavorable views of the law outnumbered those with favorable ones, 45 percent to 38 percent.

Conservatives take the trends as confirmation of their pessimistic forecasts, another reason to repeal as much of the Affordable Care Act as they can. Liberals, on the other hand, say the uneven performance of private insurers strengthens the case they made unsuccessfully in 2009-10 for a “public option” — a government-run health plan that would compete with private insurers.

Whether the problems in the marketplaces are just temporary setbacks for the law, as the White House contends, or signs of fundamental problems, as Republicans say, is not clear.

The Obama administration has repeatedly cited one important statistic in efforts to show the success of the health care law: More than 17 million uninsured people have gained coverage since Congress adopted the law in 2010 with no Republican votes in favor. And the law has cost the government less than projected, in part because spending on most types of health care has grown more slowly than expected.

But Republicans say that UnitedHealth’s concerns show that the health law is unsustainable. Arguments once made by Republicans as polemical debating points are now echoed by consumers who say they cannot afford to use insurance because of high out-of-pocket costs.

Sylvia Mathews Burwell, the secretary of health and human services, surprised supporters of the law last month when she predicted a small increase, to 10 million, in the number of people who would have marketplace coverage at the end of 2016. At the end of June, 9.9 million were enrolled.

The projection alarmed some insurers because it implied that they would not see an influx of healthy people, whose premiums could help defray the cost of care for sicker people in a well-balanced “risk pool.”

In applying for rate increases in 2016, many insurers filed data showing that they had lost money on their exchange business in 2014. To stop the losses and control costs, many have increased premiums and deductibles and other out-of-pocket costs, while reducing the number of doctors and hospitals available to consumers through their provider networks.

Conservatives want to let consumers buy policies with fewer mandated benefits, on the theory that such coverage would be more affordable. Some lawmakers say that insurers should be allowed to sell cheaper “copper” plans alongside the bronze, silver, gold and platinum plans available in the marketplaces.

“Obamacare piled mandates on the insurance industry that drive up costs and force many people to buy insurance that is more than they want or can afford,” said Senator John Barrasso, Republican of Wyoming. “The only people who are consistently signing up are the ones who get subsidies from Washington.”

But liberals draw a different lesson from insurers’ troubles.

“With the news that United Healthcare may drop coverage, it’s further proof that we need to implement a public option,” wrote Representative Jan Schakowsky, Democrat of Illinois, last week in a post on Twitter.

Harvey J. Rosenfield, the founder of Consumer Watchdog, an advocacy group based in California, suggested that “maybe the government should step in and run the system as Medicare for all.”

“People are sticking their heads in the sand if they say there are not serious problems with the Affordable Care Act,” Mr. Rosenfield said, adding: “People who were previously uninsured are indisputably better off, but many people in the middle class are struggling. They are entitled to buy health insurance, but that is an empty promise if the number of doctors and hospitals in your network has shrunk and deductibles have soared.”

In Colorado, unhappiness with the law has added momentum to an effort to replace it with a government-run health care program that would largely cut private insurers out. The initiative qualified for the 2016 ballot this month after supporters submitted over 158,000 signatures.

State Senator Irene Aguilar, a Democrat, said frustration with rising premiums and deductibles had fueled disillusionment, as had the recent collapse of a nonprofit cooperative that was the most popular insurer on the Colorado exchange.

The new system would be expensive, raising $25 billion a year in revenue from a 6.67 percent payroll tax on employers and a 3.33 percent tax deducted from workers’ paychecks.

“I like to say the ground has been tilled” by the Affordable Care Act, Ms. Aguilar said. “People have a better understanding now of the limitations of trying to do health coverage in the same way we’ve always done it.”

This month’s Kaiser poll found that Democrats remained largely supportive of the health law. But some, like Mark Kaley, a small-business owner in Indianapolis, say they are increasingly angry at the private insurers selling plans through the exchanges.

Mr. Kaley said that he and his wife had “incredibly expensive” coverage from UnitedHealth this year, using the federal exchange even though they did not qualify for premium subsidies.

“Where is my premium payment going?” Mr. Kaley asked. “If it’s providing more health care to people who didn’t have it before, then I’m O.K. with it. But if it’s going to a private insurance company who wants to pay larger dividends to its shareholders and salaries to its executives, I’m not happy.”

Referring to the health law, Mr. Kaley said: “Are there upsides to this? Yes. Were people in some way sold an optimistic view that is not panning out? Yes. People are angry and frustrated with that. The kinds of coverage and care they hoped they would have are just not there.”

Thomas M. Harte, an insurance agent in Hampstead, N.H., and a former president of the National Association of Health Underwriters, said that New Hampshire residents had clearly benefited from the Affordable Care Act in some ways. In 2014, he said, insurance was available from only one carrier, Anthem. But now, he said, consumers also have several additional choices, including Harvard Pilgrim and the nonprofit cooperative insurance plans based in Maine and Massachusetts.

“Anthem is reducing its premiums,” Mr. Harte said. “Other plans are fighting for market share.”

On the other hand, Mr. Harte said: “Employers are outraged about the burden of having to report to the Internal Revenue Service on the insurance coverage they provide to each of their employees. The amount of effort they spend to comply with the reporting requirements of health care reform is truly unbelievable.”