Is Obamacare Teetering?
So many things have happened to Obamacare these past couple of months, it’s like drinking from a fire hose.
Insurers say “Buh Bye”
In April, one of the nation’s largest health insurers, UnitedHealthcare, announced it will pull out of most of the Affordable Care Act’s (ACA), or Obamacare, marketplace exchanges by 2017.
Why? Because in 2015, the insurer lost $475 million and expects to lose $500 million this year. On May 31, the company announced it would pull out of California and on June 2, the company informed its Illinois customers that it would no longer provide health insurance on the state exchange. According to the Chicago Tribune, “UnitedHealthcare disclosed on a website dedicated to insurance brokers that it plans to offer on-exchange plans in only three states – Nevada, New York, and Virginia.”
Will other insurers leave the marketplaces? In February, 2016, Aetna’s chairman expressed he had concerns about ACA’s sustainability. The company announced last year it would no longer operate in the Obamacare subsidized exchange plans in Kansas, Utah, and District of Columbia. Aetna currently operates in only 15 state exchanges.
Early this May, Humana announced it plans to exit certain states in 2017.
Other insurers such as Cigna, Anthem, and Kaiser have said they will still participate in the exchanges. Any bets on which one pulls the plug first on Obamacare?
Tarnished Bronze Plans?
There are four tiered metallic plans, Platinum, Gold, Silver, and Bronze, which differ on the amounts the patient and insurer will share in healthcare costs. On May 4, Inside Health Policy reported that Bronze Tier plans appear to be the least profitable for insurers based on 2014 data collected by the Centers for Medicare and Medicaid Services (CMS), the agency that oversees Obamacare.
This is likely what caused CareFirst BlueCross BlueShield in Virginia to announce that it would no longer offer Bronze-level plans starting in 2017, and instead will change those plans into Silver-level plans. The insurer’s action has led health policy experts to believe other insurance providers will likely follow suit.
The Bronze plans have lower premiums because insurers only have to provide, on average, 60 percent of the cost sharing. Sean Mullin, an expert in market analysis at Leavitt Partners, believes low-risk enrollees that currently purchase Bronze plans because of their lower price will simply stop buying insurance altogether if their health plan should stop selling them. He also believes if other insurers drop their Bronze plans, it would not bode well for Obamacare’s market stability.
CO-OPs Are Not Healthy
Citizens Against Government Waste discussed the vulnerability of Obamacare-created CO-OPs in our October 2015 WasteWatcher. At that time, nine of the original 23 CO-OPs had either shut their doors or were planning to do so by the end of the year. Since then, four more CO-OPs have fallen like dominos, with Ohio’s InHealth Mutual announcing on May 26 it would close its doors.
Many healthcare policy experts had been predicting that the CO-OPs would fail practically from their inception. ACA’s over-prescriptive requirements and regulations made it difficult for CO-OPs to utilize people with insurance experience, advertise, and obtain private funding.
In March, the Senate Permanent Subcommittee on Investigations released a report, “Failure of the Affordable Care Act Health Insurance CO-OPs,” which found that the failed Obamacare co-operatives have not repaid any of the $1.2 billion in federal loans they had received and still owe more than $1 billion. Senator Rob Portman (R-Ohio) declared in a March 10 hearing, “We shouldn’t hold our breath on repayment.”
Most CO-OPs continue to operate in the red. If others should fail, their losses will be absorbed by other insurers. But in the end, it will be consumers and taxpayers that will pay for the losses through larger premiums and healthcare costs.
Expect 2017 Premiums to Go Up – A lot!
Marilyn Tavenner, president and CEO of America’s Health Insurance Plans, the trade association for health insurers, said in mid-April when it comes to premium increases “the overall trend is going to be higher than we saw in previous years.” Insurers are now submitting their 2017 rate proposals to their regulators so it will not be too long before citizens begin to learn what the rate increases will be.
Robert Laszewski, an insurance expert, wrote in a June 1 Forbes column that the idea that “everything will be fine as soon as the Obamacare market stabilizes” is nonsense being pushed by the law’s diehard supporters. While ACA fans continue to say higher premiums do not matter because they are subsidized, Laszewski points out that half of the people that are purchasing their own health insurance do not get a subsidy and are paying the full cost. And of course, the subsidies are paid for by taxpayers!
Whatever happened to President Obama’s promise that health insurance premiums will drop by $2,500 on average?
What do all these problems show? Obamacare is slowly dying. It is imploding on itself and the death spiral is underway. Once again healthcare reform will be discussed in this year’s presidential election, but there is a difference. In 2012, Obamacare was not up and running but now, American voters have had more than three years to experience it. The healthcare reform law has never had an average popularity rating above 44.2 percent.
Congressional Republicans are expected to release their consensus replacement plan soon and all indications are it reflects what free-market policy experts recommend: more power to the consumer to choose the kind of health plan they want and much less government control. Stay tuned.
