The Affordable Care Act (ACA) has proven to be a ‘money pit’ for Aetna just as it has for United Health Group and for Humana. Aetna is the third major player to end participation in many of the states with which it had been involved since the inception of the ACA.
The pent-up demand for health care services was worse than even the government, in its infinite wisdom, thought would be the case. While President Obama might’ve thought his ‘force of personality’ would somehow save the day, the national health care approach bearing his name is proving the simple reality that loss ratios fueled by pent-up demand cannot be suspended because the President decrees them to be suspended. Paying out more than one takes in is the recipe for failure…it is just that simple.
Aetna will reduce the number of states in which it participates from the current 15 to just four. It has lost more than $300 million on its exchange business so far in 2016, and there is obviously a lot of 2016 left on the calendar; that number could easily surpass $500 million. This will require that hundreds of thousands of people will be forced to seek other ACA plans and find new doctors. And there has to be some question as to just how many remaining ACA insurers there will be and just what their financial capacity amounts to in terms of taking on significant new membership. Remember the old story about just one more straw breaking the back of the camel? This could be that story being played out before our eyes.
Government spokespeople were quick to downplay this event as we might expect. Talk is cheap, however, when the safeguards to prevent huge losses basically didn’t do the job. The insurance company execs seem to want to hold the door open to future increases in ACA membership, but one wonders if this is simply the act of paying deference to the President who can make some new edict the law of the land to get even with people who dare cross him. Vindictiveness does not seem something that isn’t well understood as a useful tool in this President’s Oval Office.
There is only so much capacity across the entire health insurance industry, and three of the giants have abandoned big chunks of the marketplace.
Could it be? Could it be this is the desired outcome behind the creation of ObamaCare in the first place? Could it be that the masterminds behind ObamaCare were really just that? Masterminds, who were years ahead of the rest of us because they knew how this would play out, and knew the alternatives would be very few…maybe there would be just a single alternative? The full blown government take-over of health delivery systems?
These major companies are bleeding huge amounts of dollars. They can give us all the assurances they wish for whatever reason they wish, but that does not alter reality. Losses of this magnitude cannot continue year-after-year without major corporate failures, or the complete abandonment of health care as a marketplace as a remedy.
In that case, might we see the government take-over of health care as the sole solution that exists?