Obamacare Faces A 'Death Spiral' -- But It Turns On The Declining Participation Of Health Plans, Not Just Rising Premiums - Forbes
Over time, conforming and non-conforming insurance policies sold entirely outside the exchanges could look increasingly attractive to consumers; even accounting for the subsidies many people would get for staying inside the exchanges.
Health plans would be encouraged to drop out of the exchanges, or in the case of national insurers like Aetna [NYSE:AET] and United Healthcare [NYSE:UNH] and Cigna [NYSE:CI] (who have largely stayed out of these schemes) decide not to get in. For these insurers, their decision to stay out of the exchanges is looking smart.
Under the law, insurers who offer policies inside the Obamacare exchanges are required to treat their enrollees inside and outside the exchange as a single risk pool. Among other things, this provision was meant to reduce the chance that insurers would steer healthier patients into plans sold outside the exchanges.
But the law doesnÂ’t prevent insurers from offering plans exclusively outside the exchange. If they are entirely outside the exchange, they get to create their own risk pool, and arenÂ’t subject to the same pricing that burdens plans inside the exchange. (See this Commonwealth Fund Brief for a fuller explanation)
While consumers wouldnÂ’t have the benefit of subsidies outside the exchange, itÂ’s possible that for younger individuals, the plans sold entirely outside the costlier exchange-based risk pools could be more attractive than plans sold inside these markets. Even for those who make less than 400% of the federal poverty level (about $40,000 for a single person) and benefit from the subsidies, the risk pools completely outside the exchange could offer comparable, if not cheaper options.
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