The WasteWatcher: The Staff Blog of Citizens Against Government Waste

The Unraveling of Obamacare

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Modern Healthcare reported this week that Humana expects to lose 300,000 customers by the end of the year and that it may exit the Affordable Care Act (ACA) exchanges if the market does not turn around for them.  Humana is the fifth largest health insurer in the nation and is the second investor-owned health insurer to say it may no longer participate in ACA, better known as Obamacare. One of the reasons why Humana expects to lose customers is because it plans to phase out their non-ACA compliant, or grandfathered, plans.  These are the plans that were allowed to remain in place for an additional two years to placate millions of Americans who were angry when they found out they could not keep the plans they liked, contrary to what President Obama promised.  (See The Galen Institute’s list of Obamacare law changes by executive fiat here, number 23.) Last November, UnitedHealth Group announced it will likely pull out of Obamacare in 2017 because it lost $425 million in 2015 from plans sold in the exchanges.  It also cut back on brokers' commissions to discourage them from enrolling new customers in their exchange healthcare plans.  UnitedHealth Group is the largest health insurer in the nation. If these plans should carry out their threats, it would be a severe blow to the survival of Obamacare and it is likely other insurers will follow their lead.  One of the reasons why the insurers are pulling out is because they can no longer expect to be propped up by taxpayers through the ACA’s risk corridors provision, a topic discussed in my December WasteWatcher, "The Other Three Rs." Without access to taxpayer bailouts, insurers will be forced to sell their healthcare plans at the true market rates, which will be much higher.  Healthy people will likely decide it will be cheaper to pay the fine and take the risk not to purchase insurance, knowing that with preexisting conditions being eliminated from consideration in purchasing health insurance, they can buy it when they need it.  These actions lead to the death spiral; not enough healthy people paying premiums to cover the cost of the sicker patients that will be left behind in the exchange healthcare plans. Many healthcare experts predicted back in 2010 that Obamacare was destined to fail.  Billions of taxpayer money have been wasted on a faulty enterprise that could have been more wisely spent to cover people that desperately needed health insurance. Between collapsing CO-OPs, failing state exchanges, and insurers losing millions of dollars due to Obamacare’s unwieldy and expensive mandates, the unraveling of President Obama’s signature achievement has begun.  

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