Obamacare’s November Surprise

It is hard to feel sorry for the insurance companies who were partners in crime with the Democrats when they passed this outrageous legislation. And it now appears that Democrats will also have to pay a political price for passing Obamacare.

The last thing Democrats want to contend with just a week before the 2016 presidential election is an outcry over double-digit insurance hikes as millions of Americans begin signing up for Obamacare. But that looks increasingly likely as health plans socked by Obamacare losses look to regain their financial footing by raising rates.

 Just a week after the nation’s largest insurer, UnitedHealth Group, pulled out of most Obamacare exchanges because it anticipates $650 million in losses this year, Aetna’s CEO said Thursday that his company expects to break even, but legislative fixes are needed to make the marketplace sustainable.

“I think a lot of insurance carriers expected red ink, but they didn’t expect this much red ink,” said Greg Scott, who oversees Deloitte’s health plans practice. “A number of carriers need double-digit increases.”

“Any reports of premium increases will immediately become talking points on the campaign trail,” said Larry Levitt, senior vice president for special initiatives at the nonprofit Kaiser Family Foundation. “We’re in an election where the very future of the law will be debated.”

No one denies there will be continued turbulence — or that that won’t create consumer backlash that could be politically damaging.

Average rate hikes have been modest in the past despite apocalyptic predictions: Premiums increased by an average of 8 percent this year, according to an administration analysis. That report “debunks the myth” that Obamacare customers experienced double-digit rate hikes, said Department of Health and Human Services spokesman Ben Wakana.

But there are reasons to think the next round may be different.

Health Care Service Corp., which operates Blue plans in five states, dropped out of New Mexico’s exchange for this year after regulators refused to approve rate hikes as big as the company sought. In Texas, Illinois and two other states where HCSC does business, medical costs for individual customers exceeded premiums by more than $1.3 billion last year.

Just over half of the 23 nonprofit startups seeded with Obamacare loan dollars have collapsed after hemorrhaging red ink. The 11 surviving plans continue to struggle, with more than $400 million in combined losses last year.

“I have to raise prices because I have to assume the worst,” said Martin Hickey, CEO of New Mexico Health Connections, one of the surviving co-ops, which expects to increase prices by roughly a third for 2017. “Whether it stabilizes or not, we can’t take the risk.”

One big reason is lower-than-expected enrollment of younger, often healthier people who balance the costs of those who require more costly care. Roughly 12.7 million Americans signed up for Obamacare plans during the most recent open enrollment period. That’s far below the 22 million projected by the Congressional Budget Office, and it’s certain to decline as some drop out.

And the headlines are likely to keep coming right up to Election Day since many consumers won’t see actual rates until the insurance marketplaces open Nov. 1 — a week before they go to the polls.

Since this is a political problem, it is likely that the federal government will throw billions and billions of dollars at the program before they concede that it does more damage than good. The insurance companies will continue to whine that they are losing money and they need to increase rates dramatically in order to survive. And the people are a captive audience, with no recourse but to pay whatever the insurance companies demand and the government coerces.

It should be a clear study in how government destroys society when it is given too much power. For now, one can only hope that Democrats lose big on election day and that Obamacare is excised from the economy and replaced with a free market system. It is the only way our medical system can be saved.

Source: politico.com