Jayne O'Donnell

USA TODAY

Aetna's decision to leave the Affordable Care Act exchanges in 11 states follows dozens of similar decisions by large and small insurers across the country, moves that dramatically reduced competition in some states and contributed to increased premiums.

Such a move was inevitable now that insurers have to compete on price instead of which company can attract the healthiest customers, health care experts say.

“There’s very intense price competition now,” says Sara Collins, vice president of health care coverage and access at the Commonwealth Fund. “The market is now functioning in a more typical way, so consequently some are going to do well and others are not.”

Aetna, in fact, only had the lowest price 16% of the time, according to an Urban Institute report, while some other insurers, including those more experienced with Medicaid managed care plans, tended to have lower prices. Blue Cross plans had the lowest price 42% of the time.

Prices across insurance carriers are very likely to make a big jump for 2017, records show.

Insurers are seeking approval for average national premium increases of 24%, according to calculations by Charles Gaba of ACAsignups.net. What insurers request and states approve is often quite different, but experts say it will be more difficult for states to drive harder bargains with insurers given the losses many are facing with ACA plans.

Aetna to exit nearly 7 in 10 Obamacare plans

Indeed, in the five states that have already signed off on insurers' premiums, the average increase was 17%, Gaba says. The 2016 increase was 10%.

The consolidation of insurers has a very small effect on the vast majority of people who buy insurance on the exchanges, as more than 80% get subsidies to help them afford their insurance. But it could hamper efforts to attract those who remain uninsured and aren't eligible for much or any financial assistance.

Most uninsured people don't realize they can receive subsidies or would be able to get Medicaid if their state expanded the program, Commonwealth Fund research shows.

Still, consolidation creates huge headaches for some consumers. For many in Illinois, Aetna’s announcement was a double whammy.

Jordan Wishner, a Chicago area broker who owns the Health Insurance Shoppe, was already reeling personally and professionally after Illinois last month ordered the insurance co-op Land of Lincoln Health to shut down. Aetna is the next most affordable plan for his family of four so he will switch to Aetna and then another insurer for 2017. Wishner has 300 clients who are among the nearly 50,000 residents who must find new plans. Those who already met their deductibles have to start with a new deductible and pay higher premiums.

“This is not affordable for consumers,” he said.

While the success of the insurance exchanges doesn't depend on the presence of any one large carrier such as Aetna or United Healthcare — which is gradually leaving many markets — the Robert Wood Johnson Foundation’s Katherine Hempstead says the exits should accelerate efforts by regulators to stabilize the system so both consumers and insurers find it affordable.

Aetna's exit deals blow to Obamacare, patients

Last Friday, Kevin Counihan, CEO of Healthcare.gov, said the Department of Health and Human Services is considering bolstering programs to help insurers manage the risk of treating their new customers. Healthcare.gov handles insurance sales for 38 states that didn’t set up their own.

Aetna may return to the health care exchanges, since it will still sell individual policies in the 11 states where it's leaving the exchanges, said company spokesman T.J. Crawford. That would depend on potential changes in the ACA rules, he said.

The company may also be looking for leverage with the federal government. Its announcement last week that it was mulling the move might be an attempt to use it as a "bargaining chip" related to the Justice Department's refusal to support its merger with Humana, said Sen. Elizabeth Warren, D-Mass.

Crawford denied that, saying the move was based on losses.

While Aetna’s announcement isn’t critical to the future of the exchanges, it is “pointing to some issues that it would be good to address,” says Hempstead.

Among the solutions being discussed:



• Helping more consumers. Increasing subsidies to those making more than 250% of the federal poverty limit — or $50,400 for a family of three — would help more consumers afford their plans and attract more of the uninsured. The impact of premium increases on low-income consumers is negligible and only amounted to about $4 a month for those receiving the highest subsidies this year. But those earning the smallest subsidies or none at all are really feeling the pinch.

• Subsidizing insurers more — and longer. Insurance companies and employers pay fees that help reimburse insurers that face unusually high claims, but that “reinsurance” program is slated to expire after this year. That’s one of the reasons premiums are making such a big jump for 2017. Many have called for that program to be extended. HHS is also considering including prescription drug use in the risk adjustment formula that determines how much money insurers get to compensate them for having unhealthy customers, says Hempstead.

• Having states help insurers, too. Alaskans faced such a steep premium increase for 2017 with their one exchange insurer that the state passed a law that authorized pumping $55 million into the system to further subsidize the company, which then dramatically dropped its planned premium increase. Counihan suggested Friday that more states could pursue similar programs. In North Carolina, where Blue Cross Blue Shield suggested in February that it might leave the exchange, United Healthcare announced in April that it is dropping its ACA exchange plans. The state's Democratic insurance commissioner, George Goodwin, wrote to HHS Secretary Sylvia Burwell in February lamenting that if current trends continued, "some North Carolinians will have no access to health insurance at all" because there was only one insurer in some counties.

• Cutting coverage requirements. All ACA plans must include 10 benefits that the law deems “essential,” but many healthy young consumers want cheaper, more bare-bones plans. Some even buy these catastrophic types of plans that don’t meet the ACA and pay the penalties for not having sufficient coverage.

Hempstead remains hopeful about the future of the exchanges. Aetna, after all, left the door open to returning next year. And there’s precedent in the early challenges faced by regulators and insurers with the Medicare Part D prescription drug plans and Medicare Advantage managed care plans — and the federal solutions that encouraged insurers to participate.

“Everyone agrees improvements could be made. It’s just a matter of how well and how soon they are made,” says Hempstead. “There are just too many people in this market for it not to be preserved.”