Health Insurers' Exit Spells Trouble for Obamacare in Texas
Written by Editor   
Wednesday, September 07, 2016 07:13 AM

The roughly 1.3 million Texans who bought health insurance under the Affordable Care Act will likely have fewer, more expensive coverage options in 2017, as health plans continue to announce they will no longer sell their products in Texas.

Another Insurance company announced it would partially withdraw from the Texas market, joining veteran health plans Aetna, UnitedHealthcare and Scott and White on the list of companies that recently announced they would abandon the marketplace created by President Obama’s signature health law. The companies said their costs of providing coverage to middle-income Texans have been unsustainable, fueling concerns about a lack of competition and consumer choice within the health insurance market next year.

The announcements come at a time of uncertainty for health insurance markets nationwide, with several major health insurers opting to abandon the exchanges in all but a handful of states. 

I think what we should be expecting is premiums that are substantially higher, and I think there’s a real risk that other insurers pull out,” said Michael Morrisey, a professor at the Texas A&M University School of Public Health. “We may be beginning to see the death spiral of insurance plans in the exchanges.”

Major health insurers that have not indicated they will leave the exchange — most notably Blue Cross Blue Shield of Texas — have asked the federal government for permission to raise their monthly costs by up to 60 percent. Blue Cross says its financial losses in the marketplace were unexpectedly large, and last year the company ceased offering one of its plans, which covered 367,000 Texans.

In addition to Blue Cross, about a dozen smaller insurers are expected to remain in the Texas marketplace in 2017.

The Obama administration has said it is confident that the “majority” of people signing up for coverage under the Affordable Care Act will have multiple options for coverage in 2017 and will be able to purchase a plan for less than $75 per month. The federal government has reported that the average Affordable Care Act health plan in 2016 cost about $400 per month, but after tax credits, the average enrollee paid $113 per month.

Lack of insurer participation in the Affordable Care Act exchange is of particular concern for rural areas. Scott and White, which says it will continue to offer some individual market plans outside ofthe exchange, has had a significant presence in some of the state’s more sparsely populated regions.

An Aug. 19 analysis conducted by the health care consulting firm Avalere Health found that more than a quarter of Texas’ 26 federally designated geographic areas could have just one insurance carrier offering plans on the exchange in 2017.

Health economists say newly insured Texans have required more expensive care than companies were prepared to handle. Insurers last year struggled to enroll enough healthy people to offset the costs of patients with expensive medical needs, despite a provision in the law that requires people without health insurance to pay a fine. Health plans have also criticized Congress for cutting funding to programs that were intended to offset their financial losses on the exchange.

Many of the health insurance companies leaving the exchange in 2017 have said they will return in later years if the market becomes less volatile.

The enrollment period for 2017 coverage starts Nov. 1.

Federal officials have specifically targeted Texans in their efforts to boost enrollment in health insurance under the Affordable Care Act.

U.S. Census data in 2015 showed that, for the first time in more than a decade, Texas’ uninsured rate dipped below 20 percent. Still, Texas continues to have more uninsured people than any other state.