When the health insurance startup Oscar lost $92 million selling policies on New York’s insurance exchange last year, CEO Mario Schlosser could have joined the insurance executives blaming Obamacare for their companies’ struggles. Instead, he changed his business model.
Out went Oscar’s original New York model of selling traditional insurance — with access to nearly every doctor and hospital in town — to individual customers via the Affordable Care Act’s online marketplace. In came “narrow networks” that offer customers less choice but lower prices. Schlosser believes the new approach will make the company’s offerings more attractive to customers — and more profitable for investors.
Recent weeks have brought a storm of questions about whether the health insurance exchange system at the heart of President Obama’s signature health law is already unraveling amid defections by major insurers. But as Oscar’s decision illustrates, the true picture is more nuanced. Companies lose — or gain — different amounts of money on the exchanges for different reasons. They need different changes, both in the law and in their own strategies, to make their businesses profitable, which would in turn help ensure Obamacare’s long-term success. And overall, the problem is significantly smaller than it looks.
The bottom line is that the Affordable Care Act is fixable — at least if Congress is willing to take some basic steps to save it.
Obamacare’s growing pains moved back onto center stage on Aug. 15, when insurance giant Aetna said it would stop selling policies under the ACA1 next year in two-thirds of the counties it now serves. Aetna joined UnitedHealthcare and Humana, both of which had already announced plans to pull out of several states, in Humana’s case, and all but three states in United’s. The other two big …