Republicans insist that Obamacare is collapsing. That probably overstates the case. but it's at least more tethered to reality than Democrats' claims that the law is working well, going strong, and can only fall apart because Republicans are undermining it. The latest proof: Anthem's apparent decision to withdraw from most or all of the Obamacare markets where it currently participates.
In 2017, for the first time, residents of one-third of U.S. counties can choose only one insurance provider. This decision, driven by the company's lack of profitability on the Obamacare exchanges, means that next year there could be zero choices in some places.
At great expense and with many complications in the process, Obamacare created a massive subsidized insurance exchange within the broader individual health insurance market. Today, roughly 12 million Americans participate in that exchange. Premiums there have risen sharply since 2013 due to the fact that so many of the new customers are older and sicker, and also because the insurance is now required to cover many things it didn't have to before.
Yet at the same time, most of the consumers there don't notice, because the taxpayer picks up some or all of the tab in the exchange for people who have lower incomes. That's the part of Obamacare people are most likely to miss. And of course, the other desirable outcome of Obamacare is that so many more people have insurance, at least on paper, even if their deductibles are so high that it amounts to what we once would have called a catastrophic policy.
The problem is that even with the large double-digit premium hikes of recent years, the government subsidies, and a mandate that forces customers to purchase the product under penalty of law, insurers have been mostly losing their shirts in Obamacare's exchanges.
That's why several of the key players have dropped out of the Obamacare exchanges. Seventeen of the 21 non-profit cooperatives that were set up with Obamacare subsidies have already gone out of business. United Health Group and Aetna dropped out of most markets already. Recently, Humana announced that it was quitting Obamacare starting next year.
And today, Anthem, which lost $374 million on Obamacare last year, is signaling that this year will probably be its last in "a high percentage" of the geographic markets where it currently participates in Obamacare.
If Anthem quits, consumers in parts of Colorado, Kentucky, Missouri and Ohio would be at risk of having no Obamacare insurers for next year, according to an analysis from Axios, a news website. Humana's exit, similarly, will leave parts of Tennessee with no ACA insurance options, though state officials have said they're working to attract other insurers.
Democrats have been quick to adopt a "lost cause" version of history as an excuse. They blame Republicans for a provision they passed and which President Obama signed. That provision clarified (the original law was ambiguous) that taxpayers would not be on the hook for insurer losses under the risk corridor program that had been set up for the first three years of Obamacare. The idea of the risk corridor program was that as insurers settled into Obamacare, the ones that were wildly successful would pay into a pool, from which insurers that set their initial premiums too low and ended up suffering massive losses would be subsidized.
The question of whether insurers can force Congress (despite what the law now says) to pay them remains tied up in the courts. But Obamacare is now in its fourth year, and that program is over anyway. If the biggest insurers, after three years to adjust to Obamacare, thought the system could work going forward, this wouldn't be an issue for them. If on the other hand, they can't make money, then they can't provide insurance under this framework. And that seems to be what they're saying.