Die-hard opponents of the 2010 health reform law, the Affordable Care Act, have often used its real and imagined problems to argue that it is fatally flawed. Now they are seizing on an announcement by Aetna that it will reduce its participation in the health insurance marketplaces set up by the law. Donald Trump’s campaign called Aetna’s move “the latest blow to this broken law that is slowly imploding under its regulatory red tape.”
This is hyperbole. The law has survived many setbacks, and it will overcome Aetna’s decision, too.
The law set up federal and state-run marketplaces where people who don’t have health insurance through their employers or government programs like Medicare can buy coverage. Despite initial problems with HealthCare.gov, the federal program’s website, and some state sites, the marketplaces have helped many Americans become insured. About 11 million people have bought policies, and the government provides tax credits to 85 percent of them to make the coverage affordable.
But some big national insurers like UnitedHealth, Humana and now Aetna say they are losing too much money on marketplace policies. The reason is that the customers they signed up used more medical services than the insurers had anticipated. On Monday, Aetna said it would reduce the number of counties where it sells such policies to 242, from 778, citing a $200 million pretax loss on those policies in the second quarter. The company had sold marketplace policies to about 911,000 customers as of April.
Aetna’s decision will cause problems in some places. For example, Pinal County in Arizona might have no insurer selling marketplace policies for 2017 unless another company steps in to replace Aetna. But competition is more robust elsewhere. A Kaiser Family Foundation report published in July said that in 16 states and the District of Columbia, there would be an average of 5.8 insurers selling policies for 2017. That number was down from 6.5 in 2016 but about the same as in 2014.
There have been questions about Aetna’s motives. Senator Elizabeth Warren, Democrat of Massachusetts, said the insurer could be pressuring the Justice Department to drop or settle a lawsuit it filed last month to block Aetna’s proposed $37 billion acquisition of Humana. She and others have pointed out that as recently as April, Aetna’s chairman and chief executive, Mark Bertolini, told analysts that he considered the company’s presence in the marketplaces “a good investment.” And in May, Aetna said that it might expand into other parts of the country. Aetna says that the lawsuit did not influence its decision to reduce participation.
It is clear, however, that Congress should strengthen the marketplaces to ensure sufficient competition. For example, it could encourage more healthy people to buy insurance by extending tax credits to families that now earn too much to qualify. Many of those people find it cheaper to pay the tax penalty for not having insurance than to buy it. If more healthy people participated, more insurers would want to be on the exchanges. Congress and state governments could also consider offering a government insurance plan in rural areas and other places where there is little or no competition, as President Obama and Hillary Clinton have proposed.
Any law as complex and comprehensive as the Affordable Care Act is bound to have some hiccups. The only sensible response to those problems is to improve the law.