Withdraw of Insurers from ACA Markets Leaving Many Southwest Patients with Few or No Choices

Thirty-one percent of the nation’s counties are projected to have only one insurer offering health plans on the Affordable Care Act’s (ACA) exchanges next year, according to the nonpartisan Kaiser Family Foundation (1). Another 31% are projected to have only be only two. Most of the likely one-insurer counties are predominantly rural (Figure 1).

Figure 1. Estimated number of insurers participating in Affordable Care Act exchanges by county, 2017.

Particularly hard hit is Arizona where most of the rural portions of the state will have only one insurer and Pinal County will have none. Rural Nevada is similarly affected along with Utah, Wyoming, Oklahoma and much of the Southeast US.

That would give exchange customers in large areas of the U.S. far less choice than they had this year, when only 7% of counties had one insurer and 29% had two (Figure 2).

Figure 2. Net changes in number of insurers compared to 2016.

Many insurers are losing money on the health plans they sell through the exchanges. Insurance giants UnitedHealth, Humana, and Aetna have cited heavy losses as the reason for withdrawing from ACA marketplaces (2). The insurers that remain are in some cases seeking sharp premium increases for next year, trying to get back in the black amid higher-than-expected costs.

The marketplaces were supposed to hold down prices and expand choice by fostering competition among insurers. A concern when the exchanges were set up was that they might eventually reach the "tipping point". This is the point where too many sick patients with high health care costs are enrolled in the exchanges. Their high costs lead to higher insurance premiums driving the young and healthy enrollees out of the exchanges. According to the insurers the young and healthy enrollees low costs are necessary to balance out claims ledgers. President Obama has called for the creation of a public insurance option to compete alongside private plans in places where competition is limited.

References

1. Cox C, Semanskee A. Preliminary data on insurer exits and entrants in 2017 affordable care act marketplaces. Kaiser Health News. August 28, 2016. Avialble at: http://kff.org/health-reform/issue-brief/preliminary-data-on-insurer-exits-and-entrants-in-2017-affordable-care-act-marketplaces/ (accessed 8/29/16).
2. Mathews AW, Armour S. Health insurers’ pullback threatens to create monopolies. Wall Street Journal. August 28, 2016. Available at: http://www.wsj.com/articles/health-insurers-pullback-threatens-to-create-monopolies-1472408338 (accessed 8/29/16).

Cite as: Robbins RA. Withdraw of insurers from ACA markets leaving many southwest patients with few or no choices. Southwest J Pulm Crit Care. 2016;13(2):97-8. doi: http://dx.doi.org/10.13175/swjpcc085-16 PDF 

Banner Health, University of Arizona Health Network to Merge

On Thursday, June 26, the Arizona Board of Regents and the University of Arizona Health Network (UAHN) Board unanimously gave the go ahead to formal negotiations with Banner Health. Under the proposed agreement Banner will acquire the University of Arizona Medical Center and its south campus, which have 624 beds between them, UAHN's faculty practice, University Physicians Healthcare and the system's three health plans. Initial terms of the agreement stipulate that Banner will spend at least $500 million toward capital projects in the next five years, and it will pay $300 million to establish an academic endowment (1). UAHN’s long-term debt, totaling about $146 million, will be absorbed by Banner. UAHN and Banner said plan on reaching a definitive agreement by September.

UA President Ann Weaver Hart was quoted by Tucson News Now as saying, "These 30 years which this agreement anticipates are going to be among the most transformational in health care in America experienced in the last century. And we're absolutely committed to be the leaders in that environment. This is extremely exciting. And I hope you can feel our commitment. We are going to make the future. We are not going to be recipients of the future made by others" (2). We have a solution to expand our capabilities to move care to a higher level, to advance research for our community and our state and to educate the future health care professionals for the state of Arizona," said UAHN President and CEO Dr. Michael Waldrum.

Under the agreement Banner will commit to the "employment of the employees of UAHN and its subsidiaries for at least six months after closing at their current base salaries and retention of their seniority for employee benefits purposes. " (1). The proposal also includes a severance package for any employees who are laid off after that six-month period.

Banner owns 25 hospitals in seven states. In total, the proposed transaction is expected to generate about $1 billion in new capital, academic investments and other consideration and value beneficial to UA and the community, a news release said. The resulting organization will employ more than 37,000 people, after adding 6,300 employees at UAHN's two hospitals, the health plan and the medical group.

The Arizona Cancer Center is excluded under the proposed agreement and will remain part of the University of Arizona. The proposal does not affect Banner's existing agreement with the Banner MD Anderson Cancer Center at Gateway Medical Center in Gilbert nor does it affect UAHN's agreement with St Joseph Medical Center in Phoenix.

This would be Banner's first acquisition on an academic medical center which reflects the growing relationship between academia and corporate America (3). Balancing the teaching and research goals of academia and the profit goals of corporations whether profit or not-for profit can be difficult. Some physicians have been troubled by Banner's non-compete clauses on physician contracts as well as Banner's aggressiveness in employing physicians that directly compete with private practice physicians at their hospitals. It is unclear how this agreement might conflict with the academic goals of UAHN as well as affecting the relationship with physicians currently practicing at Banner.

Richard A. Robbins, MD

Editor

References

1. Arizona Board of Regents agenda. Available at: http://azregents.asu.edu/boardbook/Board%20Agenda%20Books/2014-06-26%20Board%20book.pdf (accessed 6/27/14).
2. Ames J, Grijalva B. UA Health Network, UA move forward in negotiations with Banner. Tucson News Now. June 26, 2014. Available at: http://www.tucsonnewsnow.com/story/25880624/ua-health-network-ua-to-move-forward-in-negotiations-with-banner (accessed 6/27/14).
3. Reece EA, Chrencik RA, Miller ED. Fully aligned academic health centers: a model for 21st-century job creation and sustainable economic growth. Acad Med. 2012;87(7):982-7. [CrossRef] [PubMed] 

Reference as: Robbins RA. Banner health, University of Arizona health network to merge. Southwest J Pulm Crit Care. 2014;8(6):358-9. doi: http://dx.doi.org/10.13175/swjpcc085-14 PDF