Americans who are suffering rate increases and higher out-of-pocket expenses thanks to the healthcare “reforms” of the “Affordable” Care Act, are about to get hit with even higher costs, after the nation’s largest health insurer announced recently that it was pulling out of the Obamacare exchanges after losing a whopping $1 billion since 2014.
As reported by The Associated Press – which tried to spin the departure in a good light for consumers (more on that in a moment) – UnitedHealth said that its losses had caused it to limit participation in the exchanges to just a handful of states next year, after expanding to 34 in 2016, though officials with the company would not be more specific about 2017 plans.
Through the end of March, UnitedHealth covered 795,000 people, or about 6 percent of the 12.7 million people who had signed up for coverage through the public exchanges by 2016. UnitedHealth’s decision came after nonprofit health cooperatives that were created by Obamacare also reported deep losses last year, while other major insurers like Aetna have begun to question the long-term viability of the exchanges – a key element in Affordable Care Act’s drive to expand exchanges even further (and, therefore, double down on their failure.
The AP said that industry watchers believe other health insurers will – in the AP’s vernacular – “adjust their exchange participation” in the coming months, which is a roundabout way of saying more companies are likely to bail in the future.
Lousy business model
As stated earlier, the AP is trying to put a huge amount of lipstick on this pig, as the intro to the story proves:
UnitedHealth’s decision to slash its participation in the Affordable Care Act’s insurance exchanges shows how these still-new marketplaces remain unsettled heading toward their fourth year.
But customers in many markets, especially cities and other populated areas, should still have several options when they start shopping for 2017 coverage.
Translation: “We’re huge supporters of President Obama, so we’re not about to tell you that the bottom is getting ready to fall out of the health insurance business, because no one participating in the exchanges is making any money.”
Unsettled? Try, “the exchanges are broke, and that’s not going to change – ever.”
Several options? Try, “All the options you DO have are going to be poor, because in order to make any money at all in this scam, we’re going to have to raise rates and fees and deductibles.” So yeah, you’ll have a “choice” alright – from bad to worse. And the pending years after 2017 don’t look any better.
“I think insurers will have to become more selective in terms of which exchanges and how they participate, but by far and away I think the United move will be the biggest one this year,” Mizuho Securities Managing Director Sheryl Skolnick told the AP.
This year. But the year isn’t over yet, is it?
President tone deaf
And, as noted by the National Center for Policy Analysis, the exchange hemorrhaging is just beginning:
The issue for many insurers is they were encouraged to participate in the exchange in return for a temporary risk sharing program called Risk Corridors. Under this program, all insurers paid into a pot of money and the firms suffering excessive losses were to share the funds based on a formula. However, a budget deal passed late in 2014, the ‘Cromnibus’ Spending Bill, required the program to be budget neutral. The losses far exceeded the pot of money collected by the program. Insurers have only received about $0.13 cents on the dollar of what they would have gotten under an opened-ended program.
The Centers for Medicare and Medicaid Services (CMS) has affirmed insurers will get their money. But the question is: where it is going to come from? CMS has $363 million to divvy up while insurers have requested $2.87 billion.
The center goes on to explain why insurers are losing so much money: the lack of free-market economics, the same problem Obamacare always has. The “marketplace” is fabricated and gerry-rigged, so it is never going to perform like it’s supposed to. The center notes that “exchange plans are suffering adverse selection due to the perverse regulations which drive up costs – making health coverage a bad deal for all but the sickest enrollees.
“The only people enrolling are those who are eligible for the most generous subsidies,” the NCPA said.
As long as healthy paying people stay out of the exchanges, these will continue to be money losers for insurance companies (and taxpayers).
Meanwhile the president remains tone deaf to the problem.