EDITORIAL: Obamacare has a big problem — that can be fixed

Aug. 23--From the start, the Affordable Care Act has been a work in progress, requiring repairs as problems, larger and smaller, have surfaced. Now comes one of the larger variety. Aetna, long a vocal supporter of the health care reform effort, announced last week that it will pull out of the insurance exchanges in Ohio and 10 other states.

Aetna follows UnitedHealth Group in curbing dramatically its presence. That is a substantial blow to the law. It also is something that can be fixed, one defining aspect of the effort requiring the application of lessons learned, a continuous assessment of what is and what is not working.

Recall why the exchanges were created. One part of so many Americans lacking health coverage involved those who do not have insurance through their employers. They must buy in the individual market, and many found the cost prohibitive. So the law set up insurance exchanges, where private insurers would compete and individuals would purchase coverage, many eligible for subsidies to help with the cost.

If the rollout of the federal exchange was botched, the concept has worked for the most part. About 11 million people have bought policies, with 85 percent receiving some subsidy.

What has made things difficult for Aetna is that the pool of the insured is sicker than projected. Thus, the company has struggled to make sufficient money, citing a pretax loss of $200 million in the second quarter. It also may be that the insurer is unhappy with the Obama White House for blocking its proposed merger with Humana, the withdrawal from the exchanges a brand of retaliation.

That possibility should not distract from the repairs needed. In a different political era, Democrats and Republicans would engage in give and take to make the necessary updates. After all, the exchanges are a compromise, elements of the market mixed with the equity of the public sector.

If the prospect of action now is bleak, perhaps it is worth weighing what might happen in the new year. Experience teaches that the subsidies are inadequate, too many still finding the premiums and deductibles beyond their means.

The exchanges include a risk-adjustment mechanism to support insurers if the pool of insured is sicker than expected. That could be altered to reflect better the financial realities facing insurers. A more aggressive campaign to enroll the relatively healthy would be helpful, including widening the reach of the subsidies.

Other more ambitious steps deserve consideration, including the creation of one big exchange for all individual buyers, or accelerating what the law already allows, multistate exchanges, particularly for smaller, less populated states.

Then, there is the public option, rejected six years ago yet a stronger idea today, when, for instance, six rural counties in Ohio will be left with just one insurance carrier. A public option promises competition and price restraint. It reminds that for all the problems in the Aetna exit, there are ways to improve and sustain the exchanges.

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