Big insurers still feeling mighty wary of ObamaCare exchanges

posted at 1:21 pm on September 3, 2013 by Erika Johnsen

The Obama administration is working frantically to persuade the younger and healthier people that they need to pay for the costs of care for the older, sicker people with more health-care needs — i.e., the people much more likely to join the program, especially at its outset — to sign up for ObamaCare en masse. Without lots of relatively low-maintenance individuals to balance out these riskier insurance pools, things are likely to get a heck of a lot more expensive — and, predictably, at least several major insurance companies have some major trepidation over the exact same thing.

California and Washington, for instance — two of the states that have made some of the biggest investments in readying their ObamaCare exchanges for the October 1st grand opening — have had difficulties enticing insurance companies into participating in their exchanges meant to help insure individuals and small businesses, even with the promise of the proffered federal subsidies for lower-income individuals. Such pedestrian, ignoble concerns as actually turning a profit don’t much trouble the collective mind of the Obama administration, but for businesses voluntarily providing a valuable service to consumers in the marketplace, they’re kind of a big deal. Given the uncertainty over how the law’s initial active phases are going to pan out, several large insurance are hanging back, via the Financial Times:

Some big US health insurers, including Cigna, Aetna and UnitedHealthcare, are steering clear of most of the new state healthcare exchanges amid uncertainty about the kinds of customers they might attract: namely sick ones. …

But healthcare policy experts and analysts say that the decision also reflects uncertainty about whether the exchanges will be profitable, given how little is known about who will sign up to buy insurance on the new exchanges. …

A spokesman for Cigna, which is participating in five of 50 new exchanges, agreed that the provisions would help the company manage risk.

But he added of the general sense of uncertainty: “Our view is that Christmas is coming. We’ve made our list, but we still don’t know what we are going to find under the tree on Christmas day.”

UnitedHealthcare said it would participate in about 12 exchanges initially, but said the exchanges had the “potential to be a growth market” over time.

A spokesman for Aetna said it would participate in up to 14 exchanges. It emphasised that it planned to position itself “for the future”.

Which people and how many people sign up for ObamaCare in the first year or so is still a fairly open question, and until these insurance companies can better calculate the costs and benefits of getting involved, they’re waiting it out — but I think Democrats can almost certainly forget about any of the much-desired smooth sailing leading up to the 2014 midterms.


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I’m so happy that I liked my plan, doctor, and will not be paying a dime more in 2014. I’d hate to be subjected to Obamacare like those suckers who didn’t like their plan, doctor, or premiums. /

Such pedestrian, ignoble concerns as actually turning a profit don’t much trouble the collective mind of the Obama administration

That’s because single payer has always been the goal. Destroying the private insurance system through Obamacare the means to the end.

Happy Nomad on September 3, 2013 at 1:30 PM

have had difficulties enticing insurance companies into participating in their exchanges meant to help insure individuals and small businesses, even with the promise of the proffered federal subsidies for lower-income individuals.

The Fascist-Democratic solution to this will be to make participation mandatory.

“Say, that’s a pretty good looking bidness license ya gots there. Be a shame if anyting happened to it. . .”

rbj on September 3, 2013 at 1:31 PM

No surprises. Single payer is the endgame.

conservative pilgrim on September 3, 2013 at 1:35 PM

No surprises. Single payer is the endgame.

conservative pilgrim on September 3, 2013 at 1:35 PM

That single player is the goal is only a surprise to the oblivious, willfully uninformed and unaware. And that makes a whole lotta people.

hawkeye54 on September 3, 2013 at 1:38 PM

Here is a dirty little secret about insurance companies…ready?

They have to make a profit.

No profit, no ability to provide coverage, for you, or for anyone else but the very first policy holders who file a claim.

No profit, it all becomes a Ponzi, just a pyramid scheme.

The exchanges actually work to prevent insurance providers from making a profit.

They are not protecting the alleged fat-cats, they are protecting those who pay their premiums, adhere to the terms of the various policies they purchased, and when the needs arise call upon the insurer to cover costs, they, the patients in need, cannot afford on their own.

Kill the profit…kill the insurance company.

coldwarrior on September 3, 2013 at 1:44 PM

coldwarrior on September 3, 2013 at 1:44 PM

The “They” in the penultimate paragraph refers to the insurance companies…certainly not the “exchanges.”

coldwarrior on September 3, 2013 at 1:57 PM

At this point, they should be forced to participate just like the rest of us. They were all gung ho for this law to pass because there needed to be ‘changes’ in healthcare. Not sure how all this will play out? My response is too bad for them. These companies have caused many of us to already experience outrageous increases in healthcare costs so they need to know exactly how their customers (that they all claim to value) feel when it hits the company pocketbook too.

Navybrat on September 3, 2013 at 1:58 PM

…difficulties enticing insurance companies into participating in their exchanges meant to help insure individuals and small businesses, even with the promise of the proffered federal subsidies for lower-income individuals.

The problem is that all the stupid requirements of a policy dictated by Obamacare raises the cost of the policy more than the subsidies.

slickwillie2001 on September 3, 2013 at 1:58 PM

Wow, who could have seen this coming?

Chris of Rights on September 3, 2013 at 2:02 PM

Here is a dirty little secret about insurance companies…ready?

They have to make a profit.

coldwarrior on September 3, 2013 at 1:44 PM

WRONG!
Liberal Progressives agree strongly that insurance companies have to make a profit—about $15/hr.

NOMOBO on September 3, 2013 at 2:03 PM

I blame it on those Styrofoam columns in Denver.

coldwarrior on September 3, 2013 at 2:05 PM

NOMOBO on September 3, 2013 at 2:03 PM

At a minimum. :-)

coldwarrior on September 3, 2013 at 2:06 PM

NOMOBO on September 3, 2013 at 2:03 PM

At a minimum. :-)

coldwarrior on September 3, 2013 at 2:06 PM

But not more than $250,000.

Big surprise: all these Great Thinkers on campus subscribe to the statist propaganda, until the time they are asked to pony up their own money to pay for it. You could knock me over with a feather right now. /s

The Schaef on September 3, 2013 at 2:23 PM

Mind if we dance with your dates?!

It really wasn’t a question.

You wanted it, well you got it.

D-fusit on September 3, 2013 at 2:44 PM

TRAIN WRECK!

GarandFan on September 3, 2013 at 3:02 PM

This situation might point back to when the housing bubble really got going when the emphasis was to get minority applicants mortgages (on the grounds that they were being discriminated against). Banks would have balked at approving mortgages on less than sterling credit credentials because they would have had to bear the losses from a higher default rate with the lower quality mortgages, so the USG got around that by having FNMA, FHLMC, and FHA lower the standards for mortgages they would buy. A lot of objections would fall away if the risk of default could be shifted over to someone else. (Not that other things did not also contributed to the wider difficulties)

Although not the same, this initial step by health insurers who are looking out for their businesses, could be the opening for government guarantees so that if the mix of policy holders cannot be serviced that the government then will cover the policies (step towards single-payer?).

Russ808 on September 3, 2013 at 4:11 PM

To add…

The nature of the exhanges, the mandated coverage, and all the incentives that represent the PPACA represent relatively uncharted ground for insurers. For them to jump headlong into the exchanges while the rules and regulations, even the structural and operational aspects of the exchanges themselves, are in a state of construction is tatamount to mortgage rating agencies having to decide what rating the collateralized debt obligations would have which has been described as having centuries of data on temperature in Antarctica and then trying to predict what the temperature would be in Hawaii.

Insurance companies have lots of resources for their business. But those resources are not infinite and it likely would not take too many bad outcomes to eat those resources, which would be hard to reconstitute. No wonder they are getting more concerned.

Russ808 on September 3, 2013 at 11:10 PM