Ohioans got some bad news this week, and no, we're not just talking about the fact that President Donald Trump decided to visit. Rather, it was the decision of Anthem Blue Cross Blue Shield to withdraw from its Affordable Care Act health insurance marketplace. House Speaker Paul Ryan danced on this particular grave, issuing a statement proclaiming, "this law is collapsing, and it has been for some time, with premiums skyrocketing and choices dwindling." He's not the only one. President Donald Trump said it was more proof that insurers are "fleeing and leaving" Obamacare and another reason for Congress to pass the American Health Care Act. Republican Sen. John Barrasso, a Wyoming physician, lamented it as a sign of the "continued collapse of the Obamacare market" and insisted "we need to stabilize the markets right now." Rep. Patrick Tiberi, who represents some of the Ohio counties that will now be without any insurers on the exchange, said Obamacare is "collapsing under its own weight."
We could quibble a bit and note that Anthem's decision affects about 10,500 people, or about 4 percent of the 240,000 people who bought health plans on Ohio exchanges this year. On that score alone, "collapse" seems like a strong word. But the real issue is that the people complaining about the collapsing are the ones swinging the wrecking balls. Anthem isn't getting out because it has a problem with Obamacare, it's getting out because Republicans are actively working to undermine it. The same is true in other states where assorted insurers have decided to quit the markets, and in Maryland where CareFirst BlueCross BlueShield filed for massive rate increases.
In a statement, Anthem said the reason it was pulling out was continued uncertainty over whether the federal government would continue paying billions in cost-sharing subsidies that insurers rely on to help them make a profit. The ACA includes limits on out-of-pocket costs for low-income insurance consumers, and it also provides for the federal government to reimburse insurers for some of those costs. But the Republican Congress refused to appropriate the money during the Obama years — just one of a number of ways in which they shortchanged funding for the act — and they sued when President Barack Obama made the payments anyway. That lawsuit is ongoing, and President Trump has been rather less than reassuring when it comes to voicing his commitment for continuing the payments.
Anthem also noted a "shrinking individual market," — not surprising given questions about whether the Trump administration will enforce the requirement that consumers buy insurance, and "continual changes in federal operations, rules and guidance," which, again, are entirely within the control of the people now complaining about the effects of their decisions. None of this should come as a surprise. Anthem's CEO warned in April that the company would be making decisions in June about whether to withdraw from state exchanges or seek big rate hikes based on the signals from Washington.
No question, many insurers have had difficulty making profits on the individual exchange in the early years of the Affordable Care Act, due largely to the difficulty in setting rates for the new market the law created. Many patients who flocked to the exchanges were relatively sick and expensive to cover, though the carriers' problems in at least some cases stemmed from a business decision to set initial rates low to attract market share.
But contrary to talk of collapse, conditions overall have shown signs of stabilizing in the individual marketplace. A Kaiser Family Foundation study released in April found that by the third year of implementation, as insurers had better data on which to base their rates, profitability on the individual marketplaces began to improve. Financial performance in that sector (which, it's important to note, is a small slice of the health insurance marketplace) is not back to pre-Obamacare levels, but it's headed in the right direction. A similar study by Standard & Poor's came to the same conclusion, noting that the wild card is not whether the ACA is a good law or a bad one but how much the government monkeys with it. "If the market continues unaffected, with a few fixes rather than an overhaul, we expect 2018 … to be [a year] of gradual improvement with more insurers reporting positive (albeit low single-digit) margins," S&P wrote. "But if there are significant changes to the individual market, or if [cost-sharing payments] are made null and void, the market essentially has to restart with a new set of rules."
It's not a fact when Republicans says Obamacare markets are collapsing. It's a self-fulfilling prophecy.