UnitedHealth May Quit Obamacare Market

by Gaius Publius

Thanks to the Democratic primary, there's been a lot of discussion on the left about the benefits and ills of ACA, the Obamacare public health law, versus single-payer and "Medicare For All," which Bernie Sanders is advocating. Clinton is a strong defender of the ACA and a strong, if disingenuous, critic of Sanders' Medicare For All.

From the second debate, here's Clinton defending Obamacare over Medicare For All (h/t Lambert Strether at Naked Capitalism for quotes and analysis):

NANCY CORDES: Secretary Clinton, back in– (CHEERING) Secretary Clinton, back in 1994, you said that momentum for a single-payer system would sweep the country. That sounds Sandersesque. But you don’t feel that way anymore. Why not–

HILLARY CLINTON: Well, the revolution never came. (LAUGHTER) And I waited and I’ve got the scars to show for it. We now have this great accomplishment known as the Affordable Care Act [ACA]. And– I don’t think we should have to be defending it amount [sic] Democrats. We ought to be working to improve it and prevent Republicans from both undermining it and even repealing it. [...]

I’ve looked at the legislation that Senator Sanders has proposed. And basically, he does eliminate the Affordable Care Act, eliminate private insurance, eliminates Medicare, eliminates Medicaid, Tricare, children’s health insurance program. Puts it all together in a big program which he then hands over to the state to administer. [...]

And I have to tell you, I would not want, if I lived in Iowa, Terry Branstad administering my healthcare. (APPLAUSE) (CHEERING) I– I think– I think as Democrats, we ought to proudly support the Affordable Care Act, improve it, and make it the model that we know it can be–

The middle paragraph in Clinton's reply above is disingenuous; it makes people fear what they're losing while mischaracterizing what they get in exchange. Here's Sanders on his proposal:

BERNIE SANDERS: We don’t– we don’t eliminate Medicare. We expand Medicare to all people. And we will not, under this proposal, have a situation that we have right now with the Affordable Care Act. We’ve got states like South Carolina and many other Republican states that because of their right-wing political ideology are denying millions of people the expansion of Medicaid that we passed in the Affordable Care Act. Ultimately, we have got to say as a nation, Secretary Clinton, is healthcare a right of all people or is it not?

As I said, the debate has been reignited on the left. It's also been reignited among the populace, as more and more people are finding they don't qualify for subsidies but can't pay the premiums without signing up for large deductibles:

Many Say High Deductibles Make Their Health Law Insurance All but Useless

Obama administration officials, urging people to sign up for health insurance under the Affordable Care Act, have trumpeted the low premiums available on the law’s new marketplaces.

But for many consumers, the sticker shock is coming not on the front end, when they purchase the plans, but on the back end when they get sick: sky-high deductibles that are leaving some newly insured feeling nearly as vulnerable as they were before they had coverage.

“The deductible, $3,000 a year, makes it impossible to actually go to the doctor,” said David R. Reines, 60, of Jefferson Township, N.J., a former hardware salesman with chronic knee pain. “We have insurance, but can’t afford to use it.” ...

That's just a taste; much more at the link.

You can see the controversy, which in truth started the day the ACA was proposed and which has more or less never stopped, even on the left. The problem for single-payer (Medicare For All) advocates is, what to do? Has the failing private insurance industry, which the ACA was designed to prop up, fully and permanently occupied the space that should have belonged to a public program like Medicare? How can we "fix" ("improve" in Clinton's framing) the ACA in a way that gives us what, frankly, most citizens would support — again, Medicare for all of us?

Which is why this news is so intriguing...

UnitedHealth May Quit Obamacare Market

The industry that ACA was designed to prop up may be starting to abandon it. Bloomberg:

UnitedHealth May Quit Obamacare Market in Blow to Health Law

The U.S.’s biggest health insurer is considering pulling out of Obamacare, a month after saying it would expand its presence in the program.

UnitedHealth Group Inc. is scaling back marketing efforts for plans it’s selling this year under the Affordable Care Act, and may quit the business entirely in 2017 because it has proven to be more costly than expected. It’s an abrupt shift from October, when the health insurer said it was planning to sell coverage in 11 new markets next year, bringing its total to 34. The company also cut its 2015 earnings forecast.

A pull-back would deal a significant blow to President Barack Obama’s signature domestic policy achievement. While UnitedHealth has been slower than some of its rivals to sell Obamacare policies since new government-run marketplaces for the plans opened in late 2013, the announcement may indicate that other insurers are struggling, said Sheryl Skolnick, an analyst at Mizuho Securities.

“If one of the largest and presumably, by reputation and experience, the most sophisticated of the health plans out there can’t make money on the exchanges, then one has to question whether the exchange as an institution is a viable enterprise,” Skolnick said.

UnitedHealth said it suspended marketing its individual exchange plans and is cutting or eliminating commissions for brokers who sell the coverage. ...

There's quite a bit more. For example:

Insurers have struggled to profit from the government-run marketplaces created by Obamacare. About a dozen non-profit “co-op” plans created under the Affordable Care Act have failed, after charging too little to cover the cost of patients’ medical care, and because an Obama administration fund designed to stabilize the market paid out just 12.6 percent of what insurers requested. And Anthem last month said some rivals were offering premiums too low to provide the coverage patients require and book a profit.

If the industry that ACA was supposed to benefit won't offer policies, and if policies that are offered are unaffordable for those who fall "in the cracks" of the population that was supposed to benefit, what's next for ACA?

Letting the Blackmailer Kill the Hostage

The argument all along for Obama's health care proposal, minus his never-intended-to-be-enacted public option, was the number of uninsured Americans combined with the lack of alternatives the administration would support. If you wanted to insure uninsured Americans, you could take ACA as offered, or take nothing. For progressives in the House, who insisted on a public option (though most supported single-payer), this was a very tough vote. Would they bend to administration blackmail — "Vote for the ACA or millions go without health insurance" — or would they tell the blackmailer, "You're the one with the power. You're the one with the gun. It's not my fault you didn't give us a bill we could vote for."

Ultimately, the entire House progressive caucus took "Dennis Kucinich's plane ride" and enough let the blackmailer win, thus passing the ACA into law. They couldn't, in our blackmail metaphor, let the blackmailer kill the hostage. Perhaps the right decision, perhaps not, but it's why we're here today.

Will Health Insurers Kill the ACA?

But the ACA's holes, its inadequacies, its dependence on the private health insurance industry to "do the right thing," remain. UnitedHealth is not "doing the right thing," if the right thing is serving the public. They are doing the right thing if the right thing is serving themselves and their CEO compensation package:

UnitedHealth CEO Stephen Hemsley made more than $66 million in 2014

CEO Pay Watch UnitedHealth Group Inc.
Stephen Hemsley, CEO
Total compensation: $66,125,208 for the year ended Dec. 31, 2014
Salary: $1,300,000
Non-equity incentive pay: $3,949,000
Other compensation: $107,479
Exercised stock options: $45,569,049
Value realized on vesting shares: $15,199,680
New stock options: 83,918

Keep that in mind the next time someone talks about a CEO's "salary." Hemsley made $66 million with a base salary of just $1.3 million. Nice multiplier. His "non-equity incentive pay" alone was three times that. Tell me he's not a predator.

The broader point though may be more important than one man's predation. If progressives weren't able to replace the ACA with Medicare for All, will the insurance companies inadvertently do the job instead, by killing the ACA themselves and clearing space for a rewrite?

Is this the end of the ACA? Stranger things have happened.

(Blue America has endorsed Bernie Sanders for President. If you'd like to help him, click here. This page also lists every progressive incumbent and candidate who has endorsed him. You can adjust the split in any way you wish.)

GP