AUDIE CORNISH, HOST:
It's been a rough few days for President Obama's signature health care law. Now three major health insurers say they will cancel many of the policies they offer through the Obamacare exchanges. The companies say they're losing hundreds of millions of dollars on those policies.
To explain why this is happening and what this might mean for the law and consumers, we're joined by NPR's health policy correspondent Alison Kodjak. And Alison, the news today is that Aetna is pulling out of the exchanges in several states. What reason did it give?
ALISON KODJAK, BYLINE: Basically their answer is they're losing money. They lost $200 million in the last quarter. What they're doing is pulling out of the specific markets that they are having the hardest time making money in, and those are often rural areas, areas with poorer and sicker people or areas with fewer hospitals that's harder to negotiate with.
CORNISH: Why have these insurance companies gone from supporting Obamacare to saying it's too expensive to maintain?
KODJAK: Well, what most of them have said is there are more sick people signing up than healthy people. The law requires that all people get health insurance. So if you don't get it through your employer, you have to buy an individual policy, and you pay a fine. But sometimes those fines are less than the premium for buying a plan, and if you're healthy and you don't think you're going to be very sick, you'd rather pay the fine.
And so what Aetna said and what the other companies, UnitedHealthcare and Humana, have said is that they're not having enough healthy people sign up and pay the premiums and spend less.
CORNISH: So what does this mean for the law? Can this system work if there are states where there, like, are so few offerings - right? - states where insurance companies have pulled out of these exchanges?
KODJAK: Well, that's a real problem. There are few states where a lot of markets are only going to have one company selling insurance, and that's not really good for the marketplace obviously because there's no competition. What the regulators are hoping, what the states are hoping is that another company will come in and fill that void. And that's happened in a few places. Recently Cigna said it was going to move into Illinois.
But the real test is going to be whether these companies can figure out how much to charge for these individual plans so that they don't lose money on every customer but also manage to get the people who are healthy to want to buy insurance. If they charge too much, there are going to be more and more healthy people who say no.
CORNISH: In the meantime, what does this mean for people in the affected states who have to buy insurance through the exchanges?
KODJAK: Well, what you're going to see is the people who have these kinds of policies who - that, you know, an Aetna policy or a Humana policy - that is being cancelled at the end of the year - this doesn't go into effect until January 2017 - they will have to find a different policy through the exchange or perhaps on their own.
If you buy a policy through the exchange and your income is low enough, you can get a federal subsidy. If you buy it on your own outside the exchanges, you can't. So wealthier people might just buy insurance on their own, at which point Aetna is still selling policies, and some of the other companies are. But if you want a subsidy and you need a subsidy, you're going to have to go through the exchanges. Most of them will at least have one policy available.
We did identify one county in Arizona that right now with Aetna pulling out doesn't look like it will have any policies available, and people are debating what's going to happen there, whether a new company will come in, whether they'll change the law somehow. It's really unclear what's going to happen there and especially if that spreads further.
CORNISH: What have we heard from the Obama administration? How have they responded to this?
KODJAK: Well, they're basically just saying the marketplace is new. It needs some time to work out the kinks and adjust so that companies can sell insurance and make money.
CORNISH: That's NPR's health policy correspondent Alison Kodjak. Thanks so much.
KODJAK: Thank you, Audie.
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