by Grace Marie Turner, 8/29/16
As health insurers head for the
exits, Americans who have been whipsawed by ObamaCare may get whacked again
this fall: First, they were thrown off private plans that were declared
illegal, then they were forced into the ObamaCare exchanges, and now they could
face the prospect of being shut out of coverage through their exchanges entirely
for 2017.
In Arizona’s Pinal County, for example, no insurers are offering coverage through the
exchange. While decisions won’t be final until next month, people in other
counties could face a similar fate.
Elsewhere, millions of Americans
will have a “choice” of just one carrier, especially in rural areas. It’s likely that Alabama,
Alaska, and Oklahoma will have only one health insurer selling individual
coverage on their exchanges next year. South Carolina and most of North
Carolina could join that list as well.
Nearly one-third of the
nation’s counties are likely to have just one insurer
offering health plans on the exchanges next year: Last year, 50 Texas counties
had only one insurer offering individual plans, according to data from the
Texas Department of Insurance. Next year, Texans in 57 counties will have only one choice. Exchange customers in many
Florida counties will be offered only the Blues plans.
United
Healthcare, Humana, and some Blues plans were
the first start the exodus from the ObamaCare exchanges. But when Aetna
CEO Mark Bertolini announced in mid-August that his company will dramatically reduce its
individual public exchange participation to just four states, it created an
earthquake.
Aetna had been all in for ObamaCare,
investing billions to offer coverage through the ACA exchanges. But after
losing $430 million in this market since January 2014, Bertolini had to answer
to his shareholders.
Insurers are pulling out largely
because the exchange risk pools are getting worse, not better as the White
House had promised. They are losing money and see little or no prospect
for the bleeding to stop. The sicker
risk pools mean coverage will be much more expensive next year with the
carriers that remain.
According to ACAsignups.net, premium rate increases being requested by health insurance
carriers nationwide for 2017 average 23% (much higher than a more selective Kaiser Family
Foundation survey showing only a 9% increase).
Some consumers face even higher
increases: BlueCross BlueShield of Tennessee received a 62% premium increase
after documenting losses of $500 million on its exchange business over the last
three years. Texas Blue Cross has filed for a 58% increase for its 603,000 exchange policyholders after reporting $1.2
billion in losses on these plans over two years. In Pennsylvania, High
Mark Blue Cross is asking for an average 41% increase.
Tennessee’s insurance commissioner says the exchange in his state is “very near collapse.”
Tennessee either had to approve the requested increases or see companies drop
out.
ACA supporters say exchange
enrollees will largely be shielded from these increases because their coverage
is subsidized. But someone is
paying, and it is the beleaguered taxpayer. Further, half of those in the
potential individual health insurance market aren’t eligible for subsidies and
would have to pay these exploding costs in full.
The higher premiums will drive even
more healthy people away from the exchanges and leave costs even higher for the
remaining (sicker) population. In the ObamaCare plan with the lowest
premium—the Bronze plans—the average
individual deductible for 2016 is $5,765. For a family plan, the deductible is $11,601. A growing number of healthy
people figure they might as well be uninsured as pay high premiums for policies
with such expensive deductibles.
The Obama
administration has only itself to blame for
the ObamaCare failures—first for jamming this bill through Congress despite
warnings that the structure of the bill was an economic disaster, and then for
exacerbating the breakdown through its regulatory dictates. The ACA was
sold on the pretense that we could have a private, competitive market for
health insurance, but the law and subsequent regulations put the industry in a
straightjacket, with rules at every turn that undermined the industry’s ability
to offer attractive, competitive products.
The president over-promised on what
his law would be able to do—saying it would dramatically cut health insurance
costs for middle-income Americans while assuring them they could keep their
coverage and their doctors. His administration tried to patch over the
serious political problems with the law—and cover for the broken promises—with
whack-a-mole regulatory fixes that have only worsened them.
Now,
exchange coverage is threatened because the
costs of expensive, sick enrollees are not being offset by a greater number of
healthy members. Clearly, the president’s own
policies are driving people away from ObamaCare.
The Congressional Budget Office expected
ACA enrollment to reach 21 million this year, but the actual number likely will
be only half that. That is one of the main reasons for the huge premium increases
the remaining companies are forced to request.
The law required insurers to
misprice risk—charging older, sicker people less and younger, healthier people
more. Young adults have balked at paying up to 75% more than their actual cost so a 64-year-old can pay 13% less.
No amount of regulatory tinkering can fix this unstable economic
model.
The flawed and even illegal
subsidies to insurers through reinsurance payments to insurers are not enough
to make up for their losses, as documented in research by health policy experts Doug Badger, Brian
Blase, Ed Haislmaier, and Seth Chandler.
Some critics say that insurers are
happy with being the only player left in a state or county. But that
means they are the magnet for all of the high-risk patients with no ability to
spread the loss, leading to even larger losses and higher prospective premiums.
The next
president will inherit this mess.
Those who supported this disastrous and unworkable government intervention into
the marketplace now say we need more government to fix the problems government
has created. They believe the solution is to pour more taxpayer dollars into
subsidies for individuals and insurers and to expand government even further
through a “public option.” More big government and more subsidies to insurers will not solve the underlying and fundamental problems with the law.
The reality is that if Republicans
hold even one house of Congress, they will be very reluctant to pass any
“fixes” to the program and will not create a public option, especially after
the cascade of co-op failures built on the public-option model.
Instead, Republicans will look to
advance elements of their own Better Way plan and will work to garner bipartisan support. There are
areas of potential compromise: Reconfiguring ACA tax credits into
advanceable tax incentives paid in monthly installments to health-care
consumers themselves. The credits could be used to pay for health
coverage that consumers want rather than policies they are forced to purchase
by the federal government. Insurance would be regulated by states to give
consumers more coverage options with more sensible regulations.
Instead of the highly-unpopular
individual mandate in ObamaCare, Republicans would provide strong incentives
for people to stay insured through “continuous coverage protection.”
States could gain more control over Medicaid to give them an incentive to
spend federal and state dollars on this program in ways that provide better
access to care than the current balkanized program does.
We need to think more broadly about
solutions, making sure that people getting coverage now are protected, that
those not buying or obtaining coverage have greater incentives to participate,
and that the program is financially sustainable.
Grace-Marie
Turner is president of the Galen Institute, a non-profit research organization
focusing on free-market ideas for health reform. www.galen.org
Comments
There are
no unintended consequences. Obamacare
was enacted in order to destroy he health insurance industry and further
impoverish US citizens. The goal of the
Democrats has been to establish a UK/Canadian style public health service aka
socialized medicine unconstitutionally controlled and administered by the
federal government.
They will
attempt to do this by insisting that sick people be moved into Medicare or
Medicaid. What needs to happen is for the health insurance companies to get
ready to offer inexpensive catastrophic health insurance to save sick people
from bankruptcy. Coverage should be
limited to whatever is “medically necessary” to “repair and restore” patients.
Coverage options should be offered to include or not include child birth, counseling
and other condition-specific treatments. Treatments that are optional should
not be included in any coverage. These would include sex change operations,
abortions, fertility treatments and elective cosmetic surgery.
Cost
estimates for medical treatment should be given to patients in advance of
treatments being given. Patients should receive bids from multiple providers
and be free to seek cost-effective treatment. Patients should be able to access
data on outcomes for treatments to inform their decisions.
Providers
will need to allow patients the option of self-treatment with vitamin and
mineral supplements to treat or prevent their own Type II Diabetes and other
avoidable conditions.
Malpractice
settlements will need to be limited to discourage “defensive medicine” and
unnecessary tests. Federal regulations
will need to be repealed. States will need to avoid getting stuck with Medicaid
costs. Government funded healthcare is unsustainable and must be replaced with
patient-funded healthcare. Patients should be able to pay off large medical
bills over time.
Medical
scams by Big Pharma, ambulance services, vehicle impounding and post-op
infections need to end. The FDA needs to be investigated for corruption.
We must
insist that healthy people are free to choose whether or not to buy health
insurance. They should be able to self-insure with a medical savings account or
plan on paying cash for services they may need.
Norb
Leahy, Dunwoody GA Tea Party Leader
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