November marks the beginning of the Affordable Care Act’s fourth open-enrollment season and, soon after, Obamcare’s post-Obama period begins. With these milestones in mind, Politico’s Paul Demko recently took stock of the health care law in a thorough and thoughtful piece, “Obamacare’s sinking safety net,” which reporters around the country can both learn from and build on. Demko examined what ails the ACA and what fixes exist, in theory, without relying on the self-serving, dueling quotes from Obamacare opponents and supporters that too often characterized earlier reporting. Demko’s aim, he told me, was to get beyond all the “rhetoric around the ACA on all sides that obscures what’s going on.”
To begin, Demko presented North Carolina as an example of both a “smashing Obamacare success story” and “a quintessential Obamacare failure story.” While some 600,000 North Carolinians signed up for Obamacare in 2016, he explained, insurance companies doing business in the state are taking a financial bath. “Millions are now being covered through the law,” Demko wrote, “but they’re older, sicker, and more expensive to insure than anyone anticipated. To compensate, health plans are raising premiums, in some cases by a lot.” The situation in North Carolina, Demko wrote, “is repeating itself in state after state across the country and represents the most acute structural threat” to the ACA. The law was politically possible, Demko reminded readers, only because it “was built atop America’s private insurance system,” which also means it only works “if insurers find Obamacare to be a desirable business.” Demko reviewed 2015 financial filings “from nearly 100 health plans across a dozen geographically and politically diverse states,” and “found that less than a quarter of them hit the standard break-even point for insurers, at which payouts are kept to about 85 percent of premiums taken in.”
I talked to Demko about how he approached his reporting— it was his reliance on insurance data that intrigued me. More reporters should comb through the quarterly and annual financial reports carriers file with the National Association of Insurance Commissioners—which grants reporters free access to the reports by request, Demko told me. That’s where he hit pay dirt and found the direction for his story. Those data, especially numbers from annual reports, enabled him to tease out the medical claims costs as a percentage of the total premiums received for the carriers in the 12 states where he focused. Those ratios revealed where he needed to look further.
He found in New York, for example, some highly-touted, low-cost plans weren’t doing as well financially as, say, California-based Molina Healthcare, which sells exchange plans in 9 states and is, he said to me, “bullish on the ACA market.” Molina’s experience serving the Medicaid market may have helped them manage health problems experienced by low-income people who sign up for the ACA. Demko consulted other financial sources to get a read on the insurance market. A McKinsey & Company report, released as Demko was reporting the story, proved helpful in examining how the health plans ended up after the first year of Obamacare operations. He also consulted the Department of Health and Human Services website where the rate requests filed by insurers sometimes include justifications for why they are seeking more money.
“Reporters need to be willing to engage with financial documents,” Demko advised. “It’s not that hard, and you can find people to help you understand them.” My own advice: Get to know a consulting actuary or a financial analyst or professor who can help decipher the numbers.
We talked about some of the differences among states—Florida and North Carolina, for example. Both did not expand Medicaid; both had large numbers of residents signing up for Obamacare; both had little support from their governors. Yet insurance markets appear more robust in Florida with more carriers competing for business. “It’s tough to say what the reason is,” Demko said. “You have to look at each individual market in each state.” Are more sign-ups in one state a function of a more aggressive local outreach campaign? Are fewer sign-ups the result of high premiums and few choices?
Insurance regulation varies among states, and it’s influenced by politics. Some regulators are tougher on the carriers than others. Some have wanted to keep rates on the low side to encourage people to sign up. In New York, Demko said, insurers complained about regulators not giving them the increases they needed. (As it turned out, some did need them.) Another local variable is the market power of doctor groups and hospital groups. Molina’s CEO, Mario Molina, told Demko, “The more competition you have, the better the pricing. In some markets where there’s very little competition it’s difficult to get the prices that health plans need.”
There’s not an easy to way to really gauge concentration, Demko told me. “Insurance deals are easy to write about, but with hospitals that are local or regional, it’s harder to get your head around it.” Nevertheless, he said he wanted to flag competition as a key issue in how these markets are faring. It’s certainly a thread to follow for future reporting. Another one: Among the assumptions the ACA was built on that have not held up was, as Demko wrote, that “pent-up demand for health care services would dissipate” as the previously-uninsured got the care they needed. This has not happened in, for example, New York. Why?
The big take-away for reporters from Demko’s work is that Obamacare is a national and local story— especially in the coming weeks as final rates are announced and sign-ups begin in the fall. While the Politico piece did discuss possible policy fixes to the ACA’s problems and the paralyzed politics that make most of them impossible for now, reporters ought to focus on the local angles. As Demko shows, there are many.