N.C. Insurance Commissioner Wayne Goodwin this week became the latest public official to warn of the harms wreaked by the Affordable Care Act, saying the federal insurance law has destabilized the state’s insurance market and now threatens to leave some residents without options for health insurance.
Goodwin expressed his concerns in a letter sent Tuesday to Sylvia Burwell, secretary of the U.S. Department of Health and Human Services, as a follow-up to a personal conversation he had with the Obama administration official in November. Goodwin, a Democrat up for re-election this year, warned that the ACA is driving up insurance costs, reducing consumer options and generating unsustainable financial losses for the insurers, with the potential risk that insurers will withdraw from the state altogether.
Supporters of the federal health care law said Goodwin is overstating the problems and noted that his three-page letter had nothing positive to say about the ACA, despite the law’s significant reduction of the uninsured in North Carolina.
Instead, Goodwin presented a bleak analysis of what he sees as a deteriorating situation in need of urgent attention. His most recent concern: All three insurers on the federal insurance exchange have eliminated agent commissions for selling individual policies under the ACA in North Carolina.
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“Insurers cannot continue to have annual losses in the hundreds of millions and be expected to continue ‘business as usual,’ ” Goodwin wrote to Burwell. “I am highly concerned insurers may withdraw from the individual market in North Carolina altogether.”
In a subsequent phone interview, Goodwin acknowledged that the ACA has reduced the rolls of the state’s uninsured by providing subsidized health care for nearly a half-million people. But he said problems with the law and its implementation threaten to undo those benefits.
“If North Carolina continues along this path and we have no carriers, what do we do?” Goodwin said, recounting his November conversation with the DHHS secretary. “Secretary Burwell was dismayed that a state like North Carolina would be posing this question.”
The ACA has faced instantaneous and unrelenting opposition from Republicans, with repeated attempts at congressional repeal. Under Republican leadership, North Carolina did not create a state insurance exchange and did not expand Medicaid, rejecting $74 million in federal grants for those purposes.
Even so, North Carolina has achieved the third-highest ACA enrollment in the country, and insurers here increased rates by an average 27 percent this year, far exceeding national trends, in a bid to keep up with rising medical expenses.
North Carolina is not the only state experiencing turmoil in its insurance markets, but the problems here seem as pronounced as anywhere else. UnitedHealthcare, the nation’s largest insurer, expects to lose nearly $1 billion on ACA policies nationwide in the first two years and has threatened to exit the market next year.
United, along with Blue Cross and Blue Shield, and Aetna, which sells insurance as Coventry Health Care of the Carolinas, are the only three insurers that have offered ACA plans in North Carolina. Blue Cross, the state’s largest insurer, is the only one in all 100 counties.
Blue Cross lost $123 million on ACA policies in 2014, after factoring in federal financial aid, and is expected to report another loss in 2015. The Chapel Hill insurer had reported 4.9 months of financial reserves in December 2013, the eve of ACA policies going into effect, but has reported 3.17 months of financial reserves as of Sept. 30, the most recent filing. Goodwin assured that Blue Cross remains “a strong company” overall.
ACA advocates acknowledge the law’s mounting troubles here but took issue with Goodwin’s letter.
“It seems unnecessarily alarmist,” said Adam Linker, a health policy analyst with the N.C. Justice Center in Raleigh. “Having a lower uninsured rate and fewer products is better than having fewer products and more uninsured people.”
Goodwin told Burwell that the number of insurers offering individual coverage here has decreased from 29 to 8, while those offering small group coverage dropped from 27 to 10. Total plans in the individual market have fallen from 1,700 to 683.
Many of those small insurers were niche players, covering a few hundred or a few thousand people, and did not actively market their products here, noted Tim Jost, a Washington & Lee University law professor.
“Frankly they were bottom feeders, offering low-quality plans,” Jost said. “The fact that some carriers left the market doesn’t mean the market is worse off without them.”
Jost agrees that the ACA is flawed, but in his view, the law lacks ambition.
“The basic problem with the law is it just isn’t generous enough,” Jost said. “The subsidies need to increase if we want health care to be affordable.”
North Carolina has been viewed as an ACA success story, with hundreds of “navigators” statewide assisting low-income applicants, and enrollment numbers soared. But Goodwin’s insurance department approved a 32.5 percent rate increase for Blue Cross this year as the company reeled from medical expenses incurred by sicker and older customers on ACA policies.
Goodwin said obvious solutions would be implementing the policies Republicans rejected: Medicaid expansion to shift low-income customers from private insurance, and a state exchange to attract more insurers to North Carolina. Also needed, he said, is for Congress to allow states greater latitude to experiment with their own approaches.
“We need everybody’s shoulder to the wheel in solving this problem,” Goodwin said, “not political antics and political games.”