Last week Aetna, one of the country’s largest insurance companies, announced that it was cutting back its participation in the health care exchanges created by the Affordable Care Act (ACA). With several other major insurers also cutting back their participation, there will be very limited competition in many markets. This prospect has supporters of the ACA worried and opponents gleefully looking forward to the day when millions may lose their insurance.
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There are two simple ways to address this problem. For one, the insurers are still making money in the individual market outside of the exchanges. We could simply make participation in the exchanges a condition for participating in the individual markets. This in effect tells the insurers that if they want to make money insuring healthy people, they will also have to bear the risk of insuring less healthy people.
The other route would be to do what President Obama originally proposed in his 2008 campaign: set up a Medicare-type public option in the exchanges. This would ensure that everyone had an efficient low cost plan which they could buy into.
