Monday, March 07, 2016

Health Insurance Industry Struggling under Obamacare

An Investor's Business Daily editorial lays out how poorly the industry is doing.
Fitch Ratings looked at nearly three dozen [Blue Cross Blue Shield] companies and found that 23 saw a decline in earnings that totaled $1.9 billion in the first nine months of last year, while 16 had net losses.
Blue Cross Blue Shield of Michigan lost $622 million from January through September last year. Blue Cross plans in Texas, Oklahoma, New Mexico and Montana lost $442 billion. And those in Pennsylvania, Delaware and West Virginia lost $266 million.
The only glimmer of hope is that these health insurance companies have raised their premiums significantly. (Well, "hope" for the companies; not for the public paying the premiums.) This gives them a dollar cushion to ease the losses they are incurring from Obamacare mandates.

The only mandate in Obamacare that has worked is that the insurance companies now have to cover everyone for the same cost.* So the very sick pay the same as the very healthy.

The mandate that has failed is the young and healthy have to sign up and pay the same as the weak and sickly. It isn't working. Blue Cross Blue Shield insurers are feeling the pain of not enough "young and healthy" signing up:
Given their size, these [Blue Cross Blue Shield] insurers should have had the broadest and most stable insurance pools in ObamaCare. What they found instead was that the young and healthy are avoiding ObamaCare’s overpriced insurance. If the Blues are struggling, how likely is it that the smaller insurers can succeed?
(emphasis added)
There you have it in a nutshell. The big, stable guys are having trouble keeping upright under Obamacare. The whole industry is in danger.

Not the rosy picture the Obama administration painted back in 2009 or Donald Trump painted a week and a half ago.
The insurance companies are making a fortune on every single thing they do. . . . Right now they are making a fortune. . . . I know the insurance companies. They’re friends of mine. The top guys they’re friends of mine. . . . The insurance companies are making an absolute fortune.”
*The only caveat being that those who smoke could have to pay up to 50% more whether they are sick or healthy.

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