Paul Demko’s comprehensive investigation of the state of the Affordable Care Act’s fledgling insurance marketplaces foreshadowed their struggles as the Obama administration comes to a close. Drawing on both data and narrative — and avoiding the stale political rhetoric from both sides — he documented their unsustainable losses, and described what it would take to change the trajectory, if only the political will had existed to change it.
To produce “Obamacare’s Sinking Safety Net,” Paul scrutinized financial filings from nearly 100 insurance companies competing across a dozen states. He bolstered that original data with surveys done by national firms like McKinsey, as well as with on the record interviews with dozens of health plan executives and other experts over several months. His analysis revealed that in 2015 less than one in four health plans hit the standard break-even point for insurers — and found that 40 percent of them faced medical costs that outright exceeded premiums.
The bottom line: health plans lost hundreds of millions of dollars during their first two years of competing in the Obamacare marketplaces. Paul’s story also provided an authoritative examination of the underlying reasons for the financial struggles of the marketplaces. Some of the problems were self-inflicted wounds by the Obama administration; others were the handiwork of Republican saboteurs determined to undermine the law’s implementation.
But overall, the system was weighed down by one big miscalculation: Health plans badly underestimated how much it would cost to provide coverage to customers who had previously been frozen out of the health insurance market. In the months after Paul’s prescient story was published, Obamacare was beset by a steady deluge of bad news. A trio of national insurers largely abandoned the marketplaces, citing unsustainable losses. Competition in many markets dwindled to just one lone insurer selling Obamacare products. Premiums for 2017 skyrocketed by eye-popping amounts across the country — generating a wave of negative headlines just before the November elections that Donald Trump seized on.
Anyone who read “Obamacare’s Sinking Safety Net” wouldn’t have been surprised by the unraveling of the marketplaces. They’d also have an understanding of what could be done by the next administration to strengthen the landmark health care law and ensure that the 11 million Americans who have purchased coverage through the exchanges continue to have access to health insurance.