The Affordable Care Act's critics seemed to get a shocking piece of new evidence when UnitedHealth Group announced last month that it would pull out of many ACA markets next year. In fact, the news is not shocking, and it is not a sign that the law is failing.
Though UnitedHealth is the country's largest health insurer, it is not a dominant player in the marketplaces that the ACA set up for individual insurance buyers. It covers only about 6 percent of 12.7 million marketplace participants, largely because of its cost. Unsurprisingly, marketplace insurance buyers tend to pick lower-cost options. The Kaiser Family Foundation concluded that even if United stopped participating in all ACA marketplaces, premiums would go up about 1 percent overall.
United Health's exit appears to reflect two positive features of the law. First, Obamacare was meant to spur competition among insurance companies, thus constraining premiums; in many markets, this dynamic appears to be at work, to the detriment of United.
Second, the law has curtailed many of the ways that insurers used to contain their costs, such as refusing to cover certain people or certain treatments, or jacking up premiums for older customers. That is good news. Many insurers on the ACA marketplaces have responded by offering plans that keep costs down by narrowing their networks of providers. This is a better way to contain costs than those the law forbids.
That said, there is evidence that other insurers are also finding it hard to make a profit in certain ACA markets. The danger is not that the markets will fall apart, but that customers might continue to face some premium volatility as insurers raise prices to keep their balance sheets in order. The biggest issue may be that ACA marketplaces have simply taken longer than expected to develop.
The ACA's authors expected that there would be some volatility as markets found their footing, so they built some temporary stabilization mechanisms into the law. The logical response to the current state of the new health system would be keeping those mechanisms around a little longer. But we stopped expecting logic on the ACA from Congress long ago.
The Washington Post