Friday, November 20, 2015

Obamacare in Trouble: Can Only Reimburse Insurers for 12.6% of Losses; Only 35% of Eligibles for Subsidies Signing Up

The Washington Examiner has two good articles today on crucial problems for Obamacare.

The first relates to health insurance companies pulling out of the Obamacare market. The nation's largest health insurer, UnitedHealth Group announced yesterday that it may be leaving the "public exchange markets" (i.e., Obamacare). Not only is UnitedHealth Group impacted adversely but other insurers are also only being reimbursed 12.6 cents on the dollar for losses.
Now that insurers have been able to look at medical claims, what they've found is that enrollees in Obamacare are disproportionately sicker, and losses are piling up. For the 2014 benefit year, insurers losing more than expected asked for $2.87 billion in government payments through the risk corridors program, but HHS only collected $362 million from insurers performing better than expected. Thus, the funds available to the federal government only amounts to 12.6 percent of what insurers argue that they're owed.
The second relates to way too few people (including only about 35% of those eligible for subsidies) signing up for Obamacare. It's just too expensive even with subsidies.
A study published by the Robert Wood Johnson Foundation in October found that about 24 million Americans are eligible for tax credits — subsidies — to buy insurance through Obamacare. This year, about 10 million of them selected plans, with about 8.6 million actually paying the money and enrolling.
That's an enrollment rate of about 35 percent of those eligible for subsidies. Think about it: Only one in three people is signing up for Obamacare even if the government gives them money to help pay for it. It's a rate below what is necessary for Obamacare to survive in the long run.
Remember that Obamacare's authors stressed it wasn't just a program for the poor, that subsidies would be provided for families with yearly incomes up to 400 percent of the federal poverty level — that is, up to $47,080 for an individual or $97,000 for a family of four.
It's not working out that way. The Johnson Foundation found that while a lot of people with incomes below 200 percent of poverty — that is, an individual below $23,540 a year or a family of four below $48,500 — selected a subsidized Obamacare plan, very few people with incomes above that did.
MaxRedline has been keeping up on this. Here's a link to just one of his posts.


MAX Redline said...

Thanks for the link, TD. But unfortunately, it's getting even worse:
The Anthem-Cigna merger leaves individuals and employers across the country with even less choice in obtaining coverage. Paula Wade of Decision Resources Group told the Washington Post that in Connecticut, for example, “Anthem already holds 35 percent of the commercial market share, and the addition of Cigna brings their market share to 51 percent statewide.”

Less competition among the insurance giants will invariably lead to higher premiums for the insured.

That's exactly what's happening, in addition to increased "out-of-pocket" expenses and higher co-pays. Obamacare was designed to force Americans into a government-run, "single payer" system - much like the present V.A. system.

T. D. said...

Max, do you think all these problems will eventually sink Obamacare or are Dem voters too entrenched?

MAX Redline said...

Interesting question, TD. While Dems are, as you say, entrenched, the NAVs are increasingly disaffected and of course, Conservatives and even Republicans in general opposed the trainwreck from the start. But with half of the cooperatives already shutting down , the ongoing consolidation among the health insurance giants, and UnitedHealth - the largest insurer in the country - indicating that it'll pull out in 2017, it seems unlikely that even the most fervent supporters will be able to pull this turkey out of the fire before it's a charred corpse.

T. D. said...

You make a good case. I'm betting you are right. :-)