By Kip Sullivan, J.D.
The Jan. 18 Wall Street Journal carried an article about the willingness of big insurers to participate in exchanges. Its focus was UnitedHealth Group (“United Health weighs in on new exchange option,” B3). UHG consists of an insurance division (UnitedHealthcare) and a number crunching “health services” division (Optum).
According to the WSJ, UHG’s CEO Stephen Helmsley predicts UnitedHealthcare will participate in only 10 to 25 of what it says “could be as many as 100” exchanges. (I assume United derives 100 by multiplying the 50 states times 2 to reflect the Affordable Care Act provisions giving states authority to create separate exchanges for individuals and small employers.) However, Helmsley didn’t write that estimate in stone. He said he is making “absolutely no firm commitment to that range.” The Jan. 18 Minneapolis Star Tribune reported the same statement.
The WSJ article said Aetna “will probably participate in 15 exchanges in 2014,” Humana and Cigna will probably be in 10, and the Blues are expected to “participate widely.”
In short, nine months before enrollment in policies sold on the exchange is due to start, even the biggest insurers cannot say which exchanges they’ll participate in. If they are unsure about which exchanges they’ll be in, they must be even more unsure about what premiums they’ll be charging.
The WSJ article mentioned three factors that insurers say will determine which markets they participate in:
* Whether younger people will be scared off by high premiums (and not sufficiently intimidated by the fine for not having insurance);
* whether the insurer will be able to sign contracts with providers with low reimbursement rates; and
* whether the insurer already owns or can create networks of providers that restrict patient choice of provider.
In states where they already have significant market share, large insurance companies already have some sense of what their provider fees are likely to be and whether they’ll be able to create HMO-like, limited panels of providers. What insurers everywhere haven’t figured out yet is whether premiums for policies sold on the exchanges will have to soar because the exchanges attract disproportionately older and sicker people. The level of uncertainty will decline somewhat over the 2014-2016 period because the fines for not having insurance rise rapidly during those years, and that will force more healthy people to buy insurance rather than pay the fine.
The Star Tribune quoted Helmsley saying the ACA will be good for UHG. As the Star Tribune put it, Helmsley “sees the coming year – and into 2014, 2015 and beyond – as a time of great potential and profits.” The most obvious reason is that the ACA gives UnitedHealthcare millions of new customers. According to Helmsley, the ACA also raises demand for United’s “core competencies.” That is corporate speak for, “The ACA promotes the myth that health care can be improved by data crunchers. The ACA thus raises demand for our computers, our enormous claims data base, and our number crunchers.”
The Star Tribune attributed to Helmsley this exquisitely wrought prose:
“Over the last several years, we have shaped our enterprise as a uniquely adaptable construct of market-facing businesses that serve the critical markets that the ACA is expanding,” Hemsley said.
Uniquely adaptable construct? Market-facing? Construct of market-facing businesses? Don’t you wish you could write stuff like that? What Helmsley really meant was, “Thanks to the insurance industry bailout enacted by the Democrats in 2010, we expect to make a bundle. We’re quite sure we’ll make money off the ACA as a data cruncher, and we’re pretty confident we’ll make money as well selling shoddy insurance to low-income Americans forced onto the exchanges by the individual mandate in the ACA.”
Kip Sullivan, J.D., is a member of the steering committee of Physicians for a National Health Program, Minnesota chapter.
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