**WEEKEND READY**_Obamacare Is Still Under Pressure; Here's Why

Over the past five years, the Affordable Care Act ("Obamacare") has seen its fair share of hurdles as a divided nation begrudgingly accepted President Obama's efforts to reform healthcare.

From technology glitches to embroiled battles in Congress, the Affordable Care Act has been put through the ringer since its inception. However, five years later with enrollment numbers steadily increasing and heated debates over the law dying down, Obamacare is still under threat as several factors continue to weigh on the new healthcare system's future success.

Related Link: Where The Affordable Care Act Falls Short

With just one year to go in his final term as president, Obama is likely to continue focusing on overcoming challenges to his legacy healthcare law to ensure its success with a new administration.

Here's a look at five of those challenges and how they might impact the future of Obamacare.

1. Political Pressure

Obamacare has been surprisingly resilient in Washington despite efforts from several lawmakers to repeal the law. However, with a presidential election coming up in 2016, many believe that the Affordable Care Act's days could be numbered.

At the moment, every Republican candidate has promised to repeal Obamacare if elected into power — a sure sign that a change in the administration could spell disaster for supporters of the healthcare law. However, it won't be up to the new president alone. The House of Representatives and the Senate will also have a say in repealing the law, something that will likely depend on which party is in power. While the House of Representatives is largely expected to remain in Republican control, the Senate could give Democrats a leg up.

If a GOP candidate wins the 2016 election and Republicans retain the majority in Congress, most investors expect to see Obamacare eventually repealed. The process to repeal and replace the law would take a significant amount of time, but hospital stocks will likely suffer should that take place. If all of these pieces were to fall into place and this situation occurred, the new administration's reformed healthcare plans would also play a role in determining how businesses in the healthcare sector perform in the lead up to Obamacare's demise.

Related Link: 13 Stocks To Watch In The Healthcare Space

2. Personalized Medicine

Recently, the biotech space has been alight with research surrounding new drugs that may be able to treat very small subsections of the population for certain diseases. Personalized medical treatments that are able to attack a certain gene in order to treat a specific condition for a limited number of people have become lucrative investments for drug companies. These types of treatments generate much more revenue since they don't have to compete with generic brands.

However, the rise in personalized medicine could pose a big problem for Obamacare, as it significantly increases costs for insurers. Most analysts are expecting to see drug prices rise over the next decade, in large part due to personalized medicine – something that will be difficult for insurers to cover.

Most expect that in order for Obamacare to continue functioning into the future, the new administration will have to find a way to keep drug prices from getting out of control without stifling innovation at drug companies.

3. Rising Costs To Insurers

Insurers who participate in Obamacare are required to accept any customers that apply for insurance. That means those with pre-existing conditions or high risk factors cannot be turned away, which could become a problem for insurers.

Whether an insurance provider can afford the high cost of care for ailing customers depends on the number of healthy clients they've enrolled. For many insurers, the balance between healthy and unhealthy customers has been tipped out of their favor, forcing them to raise their premiums to cover the cost of care.

However, in order to raise prices, insurers must justify their need for higher premiums with the Office of the Insurance Commissioner. This process can be arduous and has contributed to some resistance from insurers to continue participating in Obamacare.

4. Insurers Pushing Back

At the moment, one of the biggest hurdles Obamacare is facing comes from insurance providers who say the exchange has eaten into their profit margins and is becoming detrimental to their success as a business. UnitedHealth Group Inc UNH recently said that the Affordable Care Act is responsible for the firm's major losses and threatened to leave the exchange if it continues as is.

Related Link: UnitedHealth Could Ditch Obamacare: What It Means For Traders

UnitedHealth Group Chief Executive Stephen J Hemsley said the firm is debating whether it will continue offering plans on the exchange in 2017.

The company will re-evaluate its participation once its 2016 plans have been sold to determine whether participating in Obamacare makes business sense. UnitedHealth is the first major insurer to threaten to leave the exchange, but some analysts believe that major insurers will soon follow suit and voice their concerns with operating under the Affordable Care Act.

5. Enrollment Issues

One of the biggest reasons that insurers are struggling with Obamacare is enrollment. While those in poor health who need medical treatment are enrolling quickly, healthy individuals are less willing to sign up and would rather put off paying their premiums until they have a medical need.

This is problematic for insurers who need healthy customers to subsidize the costs of those requiring a great deal of medical care. Insurers like UnitedHealth say that the biggest problem has been people "coming in and out of the exchange" when they have health expenses.

A survey by HealthPocket.com found that the majority of Americans consider premiums of $100 or less to be affordable, but Obamacare plans typically exceed that figure, something that many believe is contributing to the number of people who choose to forego insurance and instead pay penalty fees.

In 2015, the average non-subsidized plan available on the exchange was $364 per month, while the average subsidized plan was $101 per month. Tax credits typically make subsidized plans come in even lower than that, but for the unsubsidized population there is no financial relief.

This could become a larger problem in the future as less people will be willing to sign up for healthcare plans when they are in good health. The HealthPocket survey confirmed a troubling trend that showed young people between 18 and 34 were more likely to deem $100 the maximum amount they were willing to pay per month for health insurance.

For insurers, that section of the population represents critical group as their general lack of health problems allows their premiums to pay for the care of others. If they are unwilling to sign up for plans because the costs are too high, insurers will be unable to foot the bill for the rest of their clients.

Image Credit: Public Domain
Posted In: Health CarePoliticsTop StoriesMarketsGeneralAffordable Care ActHealthpocket.comobamacareStephen Hemsley
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