Fox Resurrects Obamacare “Death Spiral” After News Of Aetna’s Withdrawal From Insurance Exchanges

Right-Wing Media Warnings Of Previous “Death Spirals” All Fell Flat

Fox News exaggerated the implications of insurance giant Aetna’s decision to reduce its participation in health insurance exchanges created by the Affordable Care Act (ACA), also known as “Obamacare,” by claiming that the announcement was proof of an impending “death spiral” in insurance markets. Conservative media outlets have opportunistically used various so-called “death spiral” predictions over the last several years to falsely forecast the imminent demise of the President Obama’s signature legislation.

Aetna Announces Its Departure From Obamacare Exchanges

USA Today: Citing Lack Of Profitability, Aetna Will Stop Participating In Most Obamacare Exchanges. Aetna, the third largest health insurance company in the United States, announced it would cease to participate in Obamacare health insurance exchanges next year in roughly 70 percent of the counties in which it operated in 2016. The decision comes after the company announced a “pre-tax loss of $200 million on its individual health care plans” in the second quarter of 2016, many of which were obtained via insurance marketplaces established by the ACA to help low-income and previously uninsurable customers obtain affordable health coverage. From an August 16 USA Today article:

The company's decision, which it blamed on heavy losses tied to the insurance plans, follows similar moves by competitors such as UnitedHealth Group, the nation's largest insurer.

Aetna said that in 2017 it would cease offering health care insurance options through the Affordable Care Act exchanges in 68.9% of the counties where it offered plans in 2016. It will continue offering certain plans in Delaware, Iowa, Nebraska and Virginia. Affected enrollees will keep their plans through the end of 2016 but must find alternatives for next year.

Aetna sustained a second-quarter pre-tax loss of $200 million on its individual health care plans, though that figure includes results from insurance offered outside of the Obamacare exchanges.

“As a strong supporter of public exchanges as a means to meet the needs of the uninsured, we regret having to make this decision,” Aetna CEO Mark Bertolini said in a statement. “We will continue to evaluate our participation in individual public exchanges while gaining additional insight from the counties where we will maintain our presence, and may expand our footprint in the future should there be meaningful exchange-related policy improvements.” [USA Today, 8/16/16]

Huff. Post: Aetna’s Withdrawal From Exchanges May Be Retribution Against Obama Administration For Blocking Merger With Humana. Despite Aetna’s claim that its decision to end participation in most health care exchanges next year is purely a business decision, the withdrawal appears to be “directly related to a Department of Justice decision to block the insurer’s potentially lucrative merger with Humana” as a form of political retribution, which The Huffington Post reported on August 17. In a July 5 letter to the Justice Department, Aetna CEO Mark Bertolini threatened to “immediately take action to reduce our 2017 exchange footprint … [I]nstead of expanding” if the government did not approve its controversial merger with insurance giant Humana. According to The Huffington Post, “Aetna’s posture on the exchanges changed pretty radically” after the DOJ sued to block the merger on antitrust grounds, and Bertolini had argued that participation in the exchanges was “a good investment” as recently as April. [The Huffington Post, 8/17/16]

Fox News Seized On Aetna’s Announcement As Sign Of Coming “Death Spiral”

Fox’s Melissa Francis: “This Is The Death Spiral That We’ve Heard So Much About.” Fox Business host Melissa Francis claimed that Aetna’s decision to leave the marketplaces was an example of “the death spiral that we’ve heard so much about” as she attributed the insurer’s profit losses to “the way the system is set up” and the requirement that people with pre-existing conditions could not be charged prohibitive rates for adequate health insurance. Francis concluded that, in light of the supposed “death spiral,” the entire Obamacare insurance system is “falling apart” and can only be salvaged with a “single-payer” system run by the government, which she claimed would result in “terrible care” for most Americans. From the August 16 edition of Fox News’ America’s Newsroom:

MELISSA FRANCIS: It was very logical. I mean they say -- their CEO said “I'm a strong supporter of the exchanges. We regret having to make this decision.” They lost $200 million in the quarter. They were looking at losing $300 million in the next quarter. I always say these are public companies, they have a fiduciary legal responsibility to their shareholders. They have to do what is right for profits by law. They can't decide it would be the nice thing to do to continue to lose money, andso they have to pull out, they have no choice. These losses come because of the way the system is set up. You can't charge for pre-existing conditions. All these things that we put in there that people love because they want to pay less, are not mathematically possible. So the companies are pulling out -- the insurers are going away. This is the death spiral that we've heard so much about.


BILL HEMMER (HOST): You mentioned the death spiral.


HEMMER: You mention single-payer.


HEMMER: You can't do that unless you change the law, can you?

FRANCIS: There's gonna be no other way, because you get down to there is one insurance company in the exchange, then there is none. Rates go up too high. The whole thing is falling apart. You either dismantle it or you go to the system like the VA. If you do that, again, rich people are gonna opt out. They are going to get the best service. They are gonna pay out-of-pocket and they are gonna get great service. And the people that are in the system are going to get what comes from the government, which is terrible care. [Fox News, America’s Newsroom, 8/16/16]

Fox's Jesse Watters: “This Is The Death Spiral That Everybody Here Warned You About.” Fox's Jesse Watters pointed to Aetna's decision to pull their services out of several states to claim “this is the death spiral that everybody here warned you about.” From the August 16 edition of Fox News' The Five:

DANA PERINO (CO-HOST):  A major blow to Obamacare and consumers caught in its trap. One of America's largest health insurance companies is dropping out of most individual exchanges next year. Aetna says it will stop offering policies from 15 states to just 4 in 2017. The insurance giant is opting out of the Affordable Care Act after losing more than $400 million in the past two years. It's a problem that opponents to Obamacare predicted in 2009. We're going to keep this simple. Jesse? 

JESSE WATTERS (CO-HOST): This is the death spiral that everybody here warned you about.

PERINO: Predicted! 

WATTERS: So if only old and sick people sign up, and young people healthy don't, premiums spike. You can't afford it. Insurers lose money. They bail out and then the thing explodes. And it's going to explode on the next president's desk, Hillary or Trump. It's like a ticking time bomb. Death spiral here at home. Obama's legacy is also a death spiral in the Middle East. [Fox News, The Five8/16/16

This Isn’t The First Time Conservative Media Have Cried “Death Spiral”

First They Claimed A Lack of Healthy Enrollees Would Cause A Death Spiral. In the early days of the implementation of the health insurance exchanges, right-wing media made numerous predictions that a lack of young, healthy enrollees would cause the Affordable Care Act to “go into [a] death spiral and implode.” Fox News repeatedly claimed that the inability to lure healthy individuals to participate in the marketplaces would doom the success of the ACA, despite contradictory evidence that enrollment numbers were on-target and increasing. [Media Matters, 1/2/14, 1/14/14, 3/30/14, 1/11/15]

Next They Exaggerated Claims Of Massive Rate Hikes That Would Doom The Law. Another way in which the conservative media have reappropriated fears of a “death spiral” in the markets revolves around predictions of skyrocketing health insurance premiums. In 2014, several conservative media outlets predicted that health care costs would “skyrocket” as a result of the ACA's restructuring of the private insurance market. Conservatives continually predicted impending cost spikes that would result in customers refusing to purchase insurance plans, linking these false predictions of price increases to the alleged inevitable “death spiral” of the insurance market. [Media Matters, 3/20/14, 12/27/14, 7/16/15]

Then Right-Wing Media Hyped Claims Of Co-Op Failures As Proof The ACA Was Collapsing. After their predictions of an enrollment and premium increase “death spiral” fell flat, right-wing media shifted to focusing on the isolated failures of several underfunded health insurance cooperatives as proof that the president’s signature health care reform law was in a “death spiral.” These claims argued that problems in the co-ops were a “symptom for the larger disease, which is that Obamacare was never as promised” and would result in the inevitable death spiral (which never came). [Media Matters, 11/4/15]

This post has been updated with additional information.