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Business as usual, the profits of insurance companies and the ACA



By Whitney McFadden
AMSA Health Policy Chair


There are 515 counties in the US with only one insurance option through the online marketplace. Insurers have a business model based on profits that lead to marketing in areas where they will have the most financial success. The economic effects of the Affordable Care Act on the business of private insurance companies are limiting the choices of Americans in poor counties. However many Americans in these areas have higher government subsidies and therefore do not directly feel the financial burden of these higher premiums.

USC Health Finance Professor Glen Melnick explains that our model of reform does not focus on insuring everyone, but places funds in the hands of insurers who respond to business opportunities. He says, "is it going to continue to be about private insurance markets, or will it be about patients - all patients? An improved Medicare for all would be about the latter."

Aetna Inc and UnitedHealth Group Inc have focused their provider pool to counties where they believe to turn a profit. They focus on areas of stable employment, high levels of income, and better health environments. "We are very careful to pick the markets where the insurer could succeed" explains Mark Bertolini, Chief Executive of Aetna.

The evolution of business within the ACA straddles the line of capitalism and controlled markets. The result is a battle of forces both seeking sustainability and growth. In these 515 counties, the government is subsidizing the higher premiums where insurance companies have elevated rates to ensure a profit.

At the moment, subsidies are providing affordable care for these citizens, however this business model will remain as long as healthcare will continue to turn a profit.

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