Aetna's Exit From Obamacare Constricts Insurance Choices

Aetna's decision to partially withdraw from a major provision of President Barack Obama's health care law is leaving some Americans with only one or no health insurance options, threatening the law's promise to continue to reduce the number of people who have historically been too sick or too poor to access coverage.

Aetna, retaliating in part against a Department of Justice lawsuit, announced Monday that it was leaving exchanges in 11 states, following a string of similar announcements earlier this year that came from other large insurers like UnitedHealth and Humana.

The exchanges, or marketplaces, allow some Americans who don't get health insurance from an employer to compare different plans and buy them at a tax-subsidized rate, mostly in the form of reductions to the amount they pay for their policies each month.

But with insurers choosing not to participate, in part because they are losing money by covering people who are sicker and seeking out immediate care after having insurance for the first time, people who shop for these plans are left with even fewer options to choose from. Some will have only one plan to select, and at least one – Pinal County, Arizona – will have none.

The Obama administration's response is to point out that health insurance companies are still adapting to the law and that millions of people will continue to receive coverage. Officials also point out that health insurance companies can leave or join the marketplace each year. But for many customers, Aetna's pullout will be more than just an inconvenience.

Roughly 670,000 people who had Aetna in June will lose their plans and will need to choose new ones, or they can go uninsured or pay more for policies by buying plans outside the exchanges. But their new plans might not cover the doctors they've been seeing for years or the hospital they would prefer. If they are in the middle of treatment at a particular facility, they might also have to transfer all their medical records.

"It's not like switching from Crest to Colgate," says Charles Gaba, an independent analyst and author of the blog ACASignups.net. "It’s not even like switching from Sprint to Verizon, which is more headache-inducing.”

Exchange customers in rural Knox County, Missouri, are likely to have only one health insurance company to choose from, given that they're losing Aetna and UnitedHealth Care.

"It's a real trauma for us to go down from three insurance companies to one," says Ed Anderson, a financial services manager at Hawkins-Harrison Insurance in Edina, Missouri.

Anthem is the only insurer that plans to operate in the area, but its executives have also hinted at backing out in light of a Department of Justice lawsuit blocking a proposed multibillion-dollar merger between the company and Cigna. Large health insurers have said they need to merge because of growing health costs, but the government fears such consolidation will limit consumer choice. A letter obtained by the Huffington Post also indicates this played into Aetna's decision to participate in only four states next year.

Despite media reports about the planned exit in Missouri, Anderson says many of his clients likely don't know they will lose coverage yet, because in his state Aetna goes by the name Coventry, which it acquired in 2013. His customers will know when open enrollment arrives in November, however.

"I'm looking at having some pretty upset customers," he says. "There is the potential hit with costs, but also the providers they have been accustomed to using and that have cared for them will no longer be available."

Before the Aetna announcement, a Kaiser Family Foundation report published in May found that about 1 in 5 counties will be down to one insurance provider, and that 70 percent of one-provider counties are rural.

Regulators are reviewing filings submitted by insurance companies that plan to participate in 2017, so full data about which counties will have one or no insurers are not yet available in every state.

Data provided by the Ohio Department of Insurance suggest that 6 of 88 counties in the state will have one carrier to choose from now that Aetna is exiting. Kentucky says it appears that each county will continue to have at least two options, but early data from Georgia suggest that multiple counties will have only one health insurance option.

Cindy Zeldin, executive director at Georgians for a Healthy Future, says the situation in her state is exacerbated by insurance companies that limit the number of providers they cover even as some counties face severe provider shortages.

"In certain parts of the state, there is only one hospital in the area," she says. "Some counties don't have certain types of doctors."

Jennifer Simmons, director of the NC Navigator Consortium, led by Legal Aid of North Carolina, points out that some counties in the state, which Aetna is planning to exit, have been with only one insurer on the exchange for a couple of years.

"It's our experience that most consumers are able to find something that works for them," she says. "I am disappointed, but I am still confident that the marketplace is going to work for the people of North Carolina."

But the state's insurance commissioner, Wayne Goodwin, painted a decidedly less rosy picture, saying he was shocked and disappointed by Aetna's choice.

"I am angered by the impact Aetna's decision will have on Tar Heel families and our market," he said in a statement.

Blue Cross Blue Shield will be available in every North Carolina county, sometimes as the only health insurance option. For next year, it has requested to increase the cost of individual policies 18.8 percent on average. While most of these increases won't be felt by consumers because they receive tax credits, that isn't the case for everyone. Blue Cross Blue Shield has faced multiple system failures in the state, and has also suggested it might drop out of the exchange.

"The issues with Blue Cross Blue Shield become even larger now that they may be the only option people can get through the exchange," said Fred Joyner, president of Carolina Benefit Administrators Inc.

Though he says he knows the company has been feverishly working to rectify the issues, he raised concerns over whether it would be able to take on even more people when it struggled with enrollment and billing problems after covering its current customers.

"It's going to be a mess, there's no doubt about it," Joyner says.

Shelli Quenga, director of programs at the Palmetto Project in Charleston, South Carolina, said Aetna's pullout wouldn't harm the exchange. The company had operated in 14 of 46 counties.

She pointed to Alaska, in which the whole state has had only one insurer on its exchange.

"I know it's survivable because they have had one this whole time," she says.

But Alaska has the highest premium rates in the country. Having multiple options to choose from is one way to increase competition and reduce how much people pay for insurance.

Some customers may conclude it is better to go uninsured. If the cost of the lowest-level plan exceeds 8.05 percent of a person's income, they will not be penalized for going without coverage. At this time, 11 million people have insurance through exchanges.

Jason Talley, a broker who is president of Talley Benefits Insurance Group in Texas, works in rural Wilson County, which will have only one provider next year.

His company will not be assisting clients with choosing a health plan on the exchange any longer, because his employees not only have to spend time helping people choose a health plan, but helping them sift through whether the plans will allow them to see the doctors they prefer.

"It's gotten to the point where it's not feasible to consider it," he says.

The federal government has improved its listings of doctors on exchanges, but they are incomplete, and Talley says many of his clients do not use computers.

"The bottom line is that this hurts people," Talley says. "We're seeing it. This is the real result."