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Questions About Obamacare's Future As Health Insurers Back Out


This week began with a big insurance company saying it's out of the Obamacare business in nearly a dozen states. And it ends with policymakers wondering about the future of government-run insurance marketplaces. The Affordable Care Act created those marketplaces as a way to help individual consumers shop for health insurance. But Aetna is just the latest company to say it's scaling back its participation. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: Aetna and other big insurance companies say they've lost hundreds of millions of dollars trying to compete in the Obamacare marketplaces. Insurance premiums collected by those companies haven't covered the cost of providing health care to a population that's turned out to be smaller, sicker and more expensive than expected.

AVIK ROY: Part of that was because they just guessed wrong that all the models that everyone was using indicated that it would be a much broader pool of people that would sign up - young and healthy people would sign up, for example.

HORSLEY: Avik Roy was a health policy adviser to Republican presidential candidates Marco Rubio and Mitt Romney. He notes only about 11 million people bought insurance through the Obamacare marketplaces this year - just over half as many as congressional forecasters predicted. Next year, most marketplace customers will still have several insurance carriers to choose from, but Vice President Sara Collins of The Commonwealth Fund, a health research organization, says with Aetna, United Health and Humana all scaling back, shoppers in some areas may find slim pickings.

SARA COLLINS: There is a concern that in some markets they'll be fewer competitors, and we know that when a market dips below three plans, the price competition really drops. There's just less incentive for plans to offer lower prices. These will likely be mostly in more rural areas.

HORSLEY: Pinal County, Ariz., could be left with no insurance offerings in the Obamacare marketplace, though, Blue Cross is having second thoughts about its decision to pull out of that county. Competition among insurance companies is critical to help keep premiums in check.

Experts have suggested a variety of carrots and sticks to draw more customers and insurers into the marketplaces. But, like everything concerning Obamacare, there are big political hurdles. For example, more people might buy health insurance if the government subsidies were more generous. But congressional Republicans are not about to approve additional spending on a program they already hate. Roy says Democrats, on the other hand, aren't likely to agree to bigger penalties to punish people who don't buy insurance.

ROY: You could double the signs in the individual mandate, for example, but that would, of course, be incredibly controversial and unpopular.

HORSLEY: Finally, there's the so-called public option, a government-run insurance program that would compete alongside private carriers. Congress rejected that idea back in 2009, partly out of concern that government insurance would have an unfair advantage. CEO Drew Altman of the Kaiser Family Foundation says that objection might carry less weight in parts of the country that private insurers have already walked away from. But Altman admits passing a public option would be an uphill climb.

DREW ALTMAN: That is a popular idea which is easier to say than to do or to accomplish politically.

HORSLEY: President Obama argued in a recent journal article it's time to revisit the public option, and Hillary Clinton has called for that as well. Altman says Clinton may have to devote more energy to defending the Affordable Care Act on the campaign trail. Donald Trump and other Republicans point to Aetna's pullback this week as another sign the controversial health care law should be repealed. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.