HEALTH CARE/Joan Retsinas

One Displeased Insurer: I Want to Get Out

Yikes! United is unhappy! At first it was ready to sign on for another year with the Affordable Care Act; but now the numbers have come in: UnitedHealth Group Inc. lost $720 million in 2015. It may drop out of the Affordable Care Act.

United’s withdrawal would leave its estimated 800,000 members adrift.

United blames new enrollees, who enrolled after the deadline passed, for driving up costs: presumably, they enrolled when they were sick, needed care. If they had enrolled during the regular enrollment period, the “pool” would have gained from a larger share of healthier enrollees. To date, United has raised its prices, cut back on marketing, and eliminated its “top-tier” products.

The sky is not falling, but United’s threat has raised questions about the public-private partnership behind the Affordable Care Act. The Act, like many marriages, sounded like a perfect union. Private, very much for-profit, insurers would get lots of enrollees, with subsidies for those who couldn’t pay full freight. Plus insurers maintained some control over benefits, networks, and regulations. They could charge co-payments and deductibles; they could charge more for obese and smoking enrollees.

As for the nation, more citizens would have coverage, even if that coverage cost citizens more than they liked, sometimes more than they could afford.

Marriages are more than occasionally rocky. At the nuptials, both parties exult in nabbing Prince Charming, or Princess Leia. Then maybe Prince Charming morphs into an ogre; the Princess into an ogress. Or one partner espies a better match. “I do” segues into “I won’t.” It happens. The two separate, write their own Second Act.

The marriage of Industry and Government is not so different. We blithely assume that each party is content with its lot. Liberals think that Industry got the better deal; conservatives, that Government did. But the nature of political compromise is that Congress blesses these unions.

What happens when one party – a private insurer – wants out?

United claims that on “individual market” policies it lost money. Since the goal of United is primarily to earn a healthy return for shareholders, that loss is important. Capital is fungible. If United were to lose too much money, shareholders would depart.

But the problem is not that United as a whole is losing money, simply that one product line is losing money. We could be discussing the profitability of cars, books, or bowling alleys, not necessarily health care. Since health care is a commodity, backed by capital markets, however, the comparison is apt. In truth, United remains solvent; it simply wants to shed its less profitable “lines.” The profits from pharmacy benefits and technology consulting have compensated for the ACA loss. Shareholders can relax.

At this point, conservatives, pointing to United’s losses, are declaiming the dangers in inherent in the Affordable Care Act. Indeed, the specter of 800,000 enrollees left without insurance is daunting. And, realistically, if the government has written the rules so that no private insurer will participate, the Act won’t work. We’ll need to return to the Congressional drawing table for another decade or so, to replace this Act with “something else,” as Republican candidates promise, although that “something else” has not emerged after years of negotiations.

But happily the news from the healthcare markets is not grim, but hopeful. If United drops its “line,” its competitors stand ready to take up the slack. Aetna, Anthem, Molina – all reported cautious optimism. They will figure out how to make money from United’s withdrawal. They will snatch up the additional enrollees. (http://www.usatoday.com/story/money/2015/11/20/unitedhealthcare-unitedhealth-group-obamacare/76097582/)

Sometimes Second Acts work out just fine.

Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email retsinas@verizon.net.

From The Progressive Populist, March 1, 2016

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