The impending death of the nation’s health insurance exchanges have been declared time and time again. This summer, there’s more credence to those arguments.

Across the country, three national insurers have given rise to the summer of the Hixit – health insurance exchange (commonly abbreviated as HIX) exits. UnitedHealthcare, Aetna and Humana are largely skipping exchanges for 2017 open enrollment.

Other publicly traded companies have not flinched, some due to the importance of the individual market (Anthem) and others due to strong balance sheets from Medicaid (Molina Healthcare and Centene, although Centene has pulled on Health Net’s reach in Arizona’s exchange). Regional Blue Cross and Blue Shield plans have largely stuck with their exchanges, in many states becoming the lone option. Kaiser Permanente has signaled its long-term commitment to exchanges.

While insurers leaving a market is never a good sign for competition or low premium rates, the national players had limited their exposure. The problem is they often targeted states where there was not much pre-existing competition (i.e. the Southeast, where local BCBS plans all boast intimidating market shares), and the withdrawal of one or two carriers drastically cuts competition.

None of the three were major exchange players. While they each covered hundreds of thousands of enrollees, those lives were spread out over many states – nearly three dozen, in UnitedHealth’s case. While UnitedHealth sold in many rural areas, Humana narrowly targeted major metro regions where it could potentially add large blocks of new enrollment.

Aetna’s case is more interesting. Despite losses from exchange business, it was bullish on exchange participation until a month ago. The timing of the departures and previous Aetna executive statements about federal action on Aetna’s proposed merger with Humana leaves many questions, but the fact is Aetna dropped 11 of 15 exchange markets.

From the disastrous start to the first open enrollment to these departures, opponents of the healthcare law are quick to seize on any change as evidence of a death spiral. Now, even the Affordable Care Act’s staunchest supporters know the law needs fixes, especially with regard to risk adjustment. There HHS has fumbled badly, dooming the participation of its own CO-OPs and many small, regional carriers around the country. Without some risk adjustment fix, the problem could grow more acute.

So far exchanges have avoided the worst-case scenario – a county or rating area without any carriers selling plans. Mississippi narrowly averted that scenario in 2014, when nearly three dozen counties had zero carriers until Humana relented, adding them all.

Arizona’s Pinal County now faces the dreary prospect of zero exchange insurers for 2017. Again regulators and HHS will push for an insurer to jump in. But begging insurers to offer coverage in any county or rating area is a patch, not a long-term strategy.

The Hixit of these national insurers doesn’t kill the exchanges, but weakens many. If the Hixit moves beyond this trio to include Anthem and big regional players or more counties go from one exchange carrier to zero, a Hixit capable of fatally wounding the exchanges might on the horizon.

 

Follow Bill Melville on Twitter: @BillMelvilleDRG

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