Is ObamaCare working its way a death spiral? Such a thing has been predicted since Senator Marco Rubio managed to get a time bomb inserted into a bill that would not allow the Department of Health and Human Services to use money not earmarked on the “risk corridor” line of their budget as bailout cash for insurers who lose cash on the state exchanges. As it happens, with the 2016 presidential election looming and ObamaCare taking more and more of Americans paychecks making it a campaign issue, the warnings this week from the health insurance industry that without premium hikes, their losses will be far more substantial than they already are, the concept that a death spiral is around the corner is intriguing. From The Hill:
Insurers say they are losing money on their ObamaCare plans at a rapid rate, and some have begun to talk about dropping out of the marketplaces altogether.
“Something has to give,” said Larry Levitt, an expert on the health law at the Kaiser Family Foundation. “Either insurers will drop out or insurers will raise premiums.”
While analysts expect the market to stabilize once premiums rise and more young, healthy people sign up, some observers have not ruled out the possibility of a collapse of the market, known in insurance parlance as a “death spiral.”
The problem, of course, is that the young, and healthy are also budget conscious and would prefer to pay the fine for NOT having any of the approved ObamaCare, cough, Affordable Care Act plans and either pay cash for services out of pocket or purchase a non-approved plan at a much lower rate, since all of that is considerably cheaper than paying for an ObamaCare approved plan. (That story appeared in this space yesterday.)
From the beginning, ObamaCare’s success depended on all parts of the system working as prescribed in the original bill: state health care exchanges, the young financing the medical bills of the old, employers not cutting hours for their workers so as to keep them under full time status, etc. But when it comes down to it, THAT system is unsustainable financially. From the beginning of the entire fiasco, opponents and more claimed that the real reason to pass ObamaCare was always to collapse the system that actually did work in order to install single payer. That may still be the final goal, but in the meantime, insurers are reporting massive losses.
Apologists from government and inside the industry claim that this is due to the market evening out and the system settling into place. None quoted by a one-sided story at The Hill would admit to any sort of death spiral claiming that tax credits were cushioning the blow of ObamaCare sticker shock. However, the losses are stacking up and sooner or later the health insurance providers in the United States are not going to tolerate them any longer. When it comes to one major provider, Blue Cross Blue Shield, that is sure to raise some nerves:
Blue Cross of North Carolina CEO Brad Wilson said in an interview that the company had lost $400 million due to its ObamaCare business.
“We’re not alone, and I think that that also is evidence to suggest that there are systemic and fundamental challenges that we all need to have a civilized conversation about,” Wilson said.
He said a key factor in the decision on whether to stay in the market next year will be whether regulators approve whatever premium increase the company ends up proposing so as to try to make up for its losses.
Asked about the risk of a death spiral, Wilson said he is not worried about that happening “tomorrow,” but has concerns if the situation does not change over time.
“There’s not going to be something magical happen that will cause this to turn around,” Wilson said. He is pressing for changes like further tightening up extra sign up periods that insurers say people use to game the system and repealing the Health Insurance Tax, which could help lower premiums
Civilized conversation? We can’t even talk about illegal immigration and building permanent defense measures on the southern border. How are we going to do that with health insurance when the people in power are hell bent on getting their way?
ObamaCare simply needs to be relegated to the history books. It’s causing far more harm than good.