Aetna to withdraw from all Obamacare exchanges
Finding out what’s in it: Aetna has decided to withdraw from all Obamacare exchanges, after seeing its profits increase when it reduced its participation partly last year.
Aetna has been gradually withdrawing from the Obamacare exchanges. It had decided to pull out of the exchanges in other states because it lost $700 million between 2014 and 2016 and was projected to lose $200 million in 2017 despite having already significantly reduced its participation in the exchanges to only four states.
A disproportionate number of unhealthy customers have signed up for the exchanges, which provide tax subsidies to pay for insurance, causing unbalanced risk pools for many insurers. Aetna also has cited uncertainty over the future of the law and over whether it will receive federal payments as a contributing factor to its decision. [emphasis mine]
The highlighted words illustrate the fundamental problem with the Obamacare law. It forces insurance companies to take on sick people who had failed to buy insurance before they became sick. Such an insurance model is unsustainable. Insurance works because enough people buy it before they need it, thus helping to fund those who need it. If everyone can wait until they need it then there is no pool to fund any payouts, and the insurance company goes bankrupt.
As is happening with Obamacare.
Finding out what’s in it: Aetna has decided to withdraw from all Obamacare exchanges, after seeing its profits increase when it reduced its participation partly last year.
Aetna has been gradually withdrawing from the Obamacare exchanges. It had decided to pull out of the exchanges in other states because it lost $700 million between 2014 and 2016 and was projected to lose $200 million in 2017 despite having already significantly reduced its participation in the exchanges to only four states.
A disproportionate number of unhealthy customers have signed up for the exchanges, which provide tax subsidies to pay for insurance, causing unbalanced risk pools for many insurers. Aetna also has cited uncertainty over the future of the law and over whether it will receive federal payments as a contributing factor to its decision. [emphasis mine]
The highlighted words illustrate the fundamental problem with the Obamacare law. It forces insurance companies to take on sick people who had failed to buy insurance before they became sick. Such an insurance model is unsustainable. Insurance works because enough people buy it before they need it, thus helping to fund those who need it. If everyone can wait until they need it then there is no pool to fund any payouts, and the insurance company goes bankrupt.
As is happening with Obamacare.