(Bloomberg) — Later this year, residents of Pinal County, Arizona, who go shopping for health insurance under the Affordable Care Act — which is also known as Obamacare — will face a peculiar dilemma: They'll have to buy a product that may not exist.
The 400,000-population county southeast of Phoenix currently doesn't have a single health insurer offering coverage next year on the ACA exchanges, where Americans can shop for the insurance they're required to have under the law. With the impending pullout of major health insurers — including Aetna, UnitedHealth Group, and Humana — Pinal County is just one place around the country where Americans will be left with few, if any, choices for coverage.
"The idea was that people who use the exchanges would have a variety of plans by different carriers," said Robert Blendon, a health-policy professor at Harvard University's T.H. Chan School of Public Health. "If it isn't addressed, you will have more companies drop out and you'll have more pressure on the other companies in terms of their potential losses."
The dropouts also undermine a key promise of the law: multiple insurers would compete for consumers' business each year, and the power of the market would control costs and raise quality. Instead, the opposite is happening. Rates may jump 24 percent next year, according to ACASignups.net, a website that tracks the law, and a quarter of U.S. counties could have just one insurer on the exchanges, according to Cynthia Cox, a researcher at the Kaiser Family Foundation.
Few choices in many places
It wasn't always so in Arizona. When the ACA began offering coverage three years ago, the state's consumers had eight health insurers to pick from, said Swapna Reddy, a clinical assistant professor at Arizona State University's School for the Science of Health Care Delivery. In about half the state's counties, they're now down to one.
"Many insurers offered premiums that were too low from the beginning, and they weren't sustainable," she said in an interview. "Unfortunately, we might be living through the one-time correction, but hopefully it's not all doom and gloom."
In Pinal County, two insurers, Blue Cross Blue Shield of Arizona and UnitedHealth, offered ACA health plans this year. UnitedHealth is leaving and BCBS previously said it would limit its state footprint. Aetna had initially planned to jump into the county before deciding to exit the state entirely.
While the law requires everyone to have coverage, people in Pinal County probably wouldn't face a penalty for being uninsured. The Affordable Care Act contains an exemption to financial penalties if there's not an affordable option on the exchanges.
Issuers in the individual health market worry both about the total amount of health risk and whether that exposure to risk is distributed reasonably evenly. (Image: iStock)
Unstable market
"Arizona is now an example of what happens when the market is unstable, leaving residents with little choice," Blue Cross Blue Shield of Arizona said in an e-mailed statement. The not-for-profit insurer said it's re-evaluating its coverage next year because of the Aetna pull-out.
While consumers can buy insurance outside the exchanges, they won't be eligible for the government-provided tax subsidies specifically targeted to help lower-income people afford it. The average subsidy in Arizona this year is $230 a month, and more than two thirds of people on the state's exchange qualified.
Not just Arizona
It's not just Pinal County. Entire states such as South Carolina and Alabama may be down to one insurance option on the ACA exchanges, though regulators are still reviewing 2017 filings. Parts of other states, including Georgia and North Carolina, may be left with a single carrier as well.
Aetna announced its intention to pull out of 11 of the 15 states where it sells individual plans on the ACA exchanges on Monday, after earlier saying it faced $300 million in projected losses this year. UnitedHealth and Humana also said the high cost of caring for sick customers helped push them from the market.
