June 2, 2017
The News Only Gets Worse for Obamacare and Democrats
It is becoming extremely difficult to disguise or defend the Affordable Care Act’s collapsing individual health insurance marketplace, but that isn’t keeping the left from trying.
For example, MIT economist Jonathan Gruber, an ObamaCare architect who used to revel in that fact (and the money the government paid him), recently told Fox News, “Since President Trump has been elected … premiums are going up and insurers are exiting.”
While that claim is true, recent decisions to exit the ObamaCare exchanges are based on years of losses from providing ObamaCare-qualified coverage.
Blue Cross and Blue Shield of Kansas City just announced it is dropping out of the individual insurance market. Blue KC will not sell coverage to those in and out of the ObamaCare exchanges next year, affecting some 67,000 policyholders.
But note that the company’s losses of $100 million are from 2014 to 2016 — not since Jan. 20.
Earlier in May, Medica, the last insurer selling individual health insurance in most of Iowa, said it would be pulling out of ObamaCare. Wellmark and Aetna made similar announcements in April. Medica on Friday also announced that it might not offer ObamaCare-compliant plans in Nebraska next year, leaving as many as 100,000 Nebraskans with no options under ObamaCare at all.
Also in May, Aetna said it would pull out of several other states. According to CNN, “The company said it expects to lose more than $200 million in its individual business line this year, on top of nearly $700 million in losses between 2014 and 2016. Aetna withdrew from 11 of its 15 markets for 2017.”
A few years ago, Democrats and the media boasted that California-based health insurer Molina was making money selling ObamaCare policies, and other health insurers just needed to follow the Molina model. But in early May Molina’s board fired the CEO because the company was losing so much money.
And whom do Democrats blame for the collapse of a law that they wrote and passed over conservative and Republican warnings that it wouldn’t work?
President Donald Trump, of course. Well, at least they aren’t blaming President George W. Bush — at least not yet.
But the mass exodus from the exchanges and the individual market began much earlier.
In November of 2015, UnitedHealth Group CEO Stephen J. Hemsley announced that “UnitedHealthcare has pulled back on its marketing efforts for individual exchange products in 2016. The company is evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017.”
UnitedHealth was far from the only insurer to pull out early on. More than a dozen insurers covering some 800,000 people abandoned the ObamaCare exchanges in the fall of 2015, fearing the Obama administration wouldn’t have the cash to cover their losses.
UnitedHealthcare reported last year that it lost about $1 billion in 2014 and 2015 combined. Humana at the time expected to lose about $175 million. Aetna said it lost about $140 million in 2015.
Startup Oscar lost more than $100 million in 2015. And Texas Blue Cross announced in July 2015 that it was canceling a very popular ObamaCare-qualified policy covering 367,000 Texans (including my wife) because it lost $400 million on that plan.
I hate to state the obvious, but for some people you have to: Donald Trump wasn’t president then.
In order to cover those massive losses, the dwindling number of health insurers willing to continue selling individual health insurance policies have to raise their premiums significantly — to cover the losses from the previous years and to try to prevent more losses in the upcoming year.
A new report from the Department of Health and Human Services claims that “premiums were 105% higher in the 39 states using Healthcare.gov in 2017 than average individual market premiums in 2013.”
The problem is that those increases encouraged healthier people to drop coverage, leaving the insurance pool smaller and sicker, driving premiums even higher. That’s what’s referred to as the “death spiral” — and it started long before Trump became president.
ObamaCare defenders now claim that premiums are rising because Trump won’t guarantee to pay insurers certain subsidies for covering low-income people.
But premiums will continue rising, regardless of whether Trump pays those subsidies, because Democrats ignored basic actuarial principles when they created ObamaCare.
Democrats wanted all the credit when they passed ObamaCare in 2010 — especially for creating the health insurance exchanges. And it’s important to ensure they get it.