It’s been over two years since the bulk of Obamacare went into effect, and US health insurance companies are (inadvertently) making a great case for why it’s time to adopt a single-payer system and take the profit motive out of how health care is paid for once and for all.
On Monday, Aetna, the United States’ third-largest insurance company, announced that it will withdraw from Obamacare exchanges in 11 states, and that it will only offer insurance through the state-level Obamacare marketplaces in four states in 2017.
Obamacare has, overall, been a huge success, especially among the less visible and more marginalized populations in the US.
Economist David Cutler told The New York Times back in April that,
The law has clearly reduced broad measures of inequality. These are people who blend into the background of the economy. They are cleaning your hotel room, making your sandwich. The law has helped this population enormously.
In February, the Obama administration estimated that roughly 20 million more people have insurance now that Obamacare has gone into effect, and marginalized groups in general have benefited the most. According to that New York Times analysis from April: “Part-time workers gained insurance at a higher rate than full-time workers, and people with high school degrees gained it at double the rate of college graduates. Adults living in households headed by relatives, such as siblings or cousins, [which is] often a marker of economic distress, gained insurance at double the rate of traditional households.”
And having health insurance and access to affordable healthcare leads to big benefits for communities. The New York Times reported that one federally funded health clinic in South Los Angeles has enrolled 18,000 new patients under the law, nearly all of them from minority backgrounds, and the clinic reported a 44 percent increase in cervical cancer screenings and a 25 percent increase in tobacco cessation therapy, which means more lives saved and healthier community outcomes.
But Aetna’s announcement on Monday is proof that the law is still fundamentally flawed. And Aetna is by no means alone.
In April, UnitedHealth Group, the largest health insurance company in the US, announced that it would be withdrawing from Obamacare insurance exchanges in most of the 34 states where it currently operates, saying that it’s expecting to lose $650 million in 2016. The Kaiser Family Foundation points out that if United dropped out of all 34 states, 1.1 million people would have just one option for an insurer, creating a for-profit monopoly for those people.
And then there’s Humana, which announced in July that the company will offer exchange plans in “no more” than 11 states in 2017. Humana’s announcement coincidentally came on the exact same day that the Department of Justice filed a lawsuit to block the company’s proposed merger with Aetna.
Some of the shortcomings with Obamacare can be traced to the fact that so many red states have refused federal funds to expand Medicaid. But the truth is, we’re never going to be able to affordably cover every American until we address the major problem with our health care system: the profit motive.
Journalist and author T.R. Reid pointed out in his 2008 documentary Sick Around the World that the United States is the only industrialized nation in the world that allows for-profit corporations to offer basic, primary care health insurance. The key difference between us and the rest of the developed world is that health care is considered a legal and political right in every other industrialized country, and here it’s only considered a privilege.
And when people pay for health insurance provided by a for-profit company, they aren’t just paying for insurance, they’re paying for all of the administrative costs of the company, including executive salaries and CEO bonuses.
According to filings with the Securities and Exchange Commission, Aetna’s Chairman and CEO Mark Bertolini took home $27.9 million in compensation last year, about $24.8 million of which was value gained on stock options.
In 2014, UnitedHealthcare CEO Stephen Hemsley took home over $66 million, including $45.5 million in exercised stock options.
Those salaries and stock options make up just a portion of the 12-14 percent administrative overheads that are typical at for-profit health insurance companies.
So while the executives get bonuses, consumers like you and I get stiffed with paying for it in the form of inflated insurance rates!
In contrast, in 2015, the administrative overhead amounts for Medicare were only about 2 percent of the program’s operating costs, and nobody working for Medicare became a multimillionaire.
If we want universal coverage at the federal level, we need to take the profit motive out of health care with a federal single-payer program like the Medicare for All programs proposed by Congressman John Conyers and Sen. Bernie Sanders. But this isn’t something that we have to wait for Congress to take action on — citizens at the state level can take the lead.
Right now in Colorado, there is a very popular proposed amendment that would replace the state’s problematic Obamacare insurance exchange with a universal health care program called “ColoradoCare.” Very simply, the program would pair private providers with state funds from combined sources to extend health care coverage to every person in Colorado.
Citizens in Colorado are leading the way, but citizens in other states can — and should — organize and push for efficient statewide universal health care systems to replace the inefficient and costly private insurers that cruelly put profit over people.