If I Didn’t Know Obamacare Was Working Great, This Might Worry Me

 

Obamacare-train-wreck-002In times of trouble and crisis, one can find solace and stability in first principles. Example: “The Affordable Care Act is working just fine. No need to worry — ever.”

So when I read news that, on first take, would seem to possibly suggest — maybe, I dunno — Obamacare is not working just fine and one should worry … well, back to first principles.

This from Wall Street Journal reporters Anna Wilde Mathews and Stephanie Armour:

The biggest U.S. health insurer said it has suffered major losses on policies sold on the Affordable Care Act’s exchanges and will consider withdrawing from them, adding to worries about the future of the marketplaces at the heart of the Obama administration’s signature health law. The disclosure by UnitedHealth Group Inc., which had just last month sounded optimistic notes about the segment’s prospects, is the latest sign that many insurers are finding the new business unprofitable, despite an influx of customers that has helped swell revenues.

UnitedHealth’s announcement comes as other insurers have been sounding alarms about their exchange business, though the big insurer went considerably further than its peers in raising concerns about future viability. Aetna Inc. recently said it expects to lose money on its exchange business this year, but it hopes to improve the result in 2016. Humana Inc. and Cigna Corp. also flagged challenges. Even Anthem Inc., which said its exchange business is profitable, was downbeat in its third-quarter earnings call, warning that enrollment is less than expected.

“All the other big insurers are signaling the same problems,” said Ana Gupte, an analyst with Leerink Partners LLC. The major exception is companies that focus closely on the Medicaid population, such as Molina Healthcare Inc., she said. These companies have lower-cost networks of health-care providers and also draw many low-income consumers whose coverage is largely subsidized.

A Goldman Sachs Group Inc. analysis of state filings for 30 not-for-profit Blue Cross and Blue Shield insurers found that their overall companywide results were “barely break-even” for the first half of 2015. Goldman analysts projected the group would post an aggregate loss for the full year—the first since the late 1980s. The analysis said the health-law exchanges appeared to be a “key driver” for the faltering corporate results.

Hmm. Costs are higher than expected. Premiums are getting pricier. Consumer choices more limited. Fewer people than expected are signing up with the exchanges. Where might this lead? Again, the WSJ:

Analysts say the danger is that higher rates might discourage enrollment, particularly by the younger, healthier consumers that the marketplaces need to draw in. That is because they are the ones most likely to feel they can go without insurance. Their absence would have the effect of driving premiums even higher in the future, because insurers would need more rate increases to cover the costs of a smaller, sicker pool of enrollees. At its worst, this cycle can feed on itself, creating what the industry calls a “death spiral.”

Already, “the risk pool is clearly skewed toward sick people,” said Chris Rigg, an analyst with Susquehanna Financial Group. He and other analysts said that a fundamental problem was a shortfall in enrollment, and to make the marketplaces work better, policy makers would need to take steps such as making it harder for consumers to sign up for coverage outside the annual open-enrollment window.

It is only because of first principles that I can outright dismiss the “death spiral” scenario outlined above. Just as returning to first principles allows me to dismiss this conclusion from my AEI colleague Scott Gottlieb:

Meanwhile, it’s the Medicaid managed care companies that are growing the number of plans they market on the exchanges. They are also offering the best prices. The plans they sell on the Obamacare exchanges mirror their usual Medicaid fare – both in terms of the doctor networks, the drug formularies, as well as the basic design of the health coverage. In short order, Obamacare is evolving into a Medicaid marketplace. Not only in terms of the design and quality of the narrow-network plans that are being offered, but in the actual carriers that sell those policies. …

These Medicaid carriers are also offering some of the best pricing on the exchanges. Molina’s pricing for its Obamacare plans will decline 5% from last year. Cenete cut the price on its “Gold” product by 2%. Unlike the commercial carriers, the Medicaid HMOs have said that they plan to grow their Obamacare footprints. The end result should be a continued erosion toward these Medicaid managed care companies as more of the action, and enrollment, shifts into their orbit.

It’s proof anew that Obamacare was always destined to erode into a Medicaid-like benefit. Critics, including myself, have argued this for years. What couldn’t be predicted was how quickly it would be the Medicaid-only plans that serviced it.

And finally, Robert Laszewski:

When are Obamacare apologists going to stop spinning the insurance exchange enrollment as some big victory that is running smoothly? Yes, Obamacare has brought the number of those uninsured down — because of the Medicaid expansion in those states that have taken it and because the poorest people eligible for the biggest exchange subsidies and lowest deductibles have found the program attractive. But that Obamacare has been a huge failure among the working class and middle-class — not to mention those who make too much for subsidies and have to pay the full cost for their expensive plans–has once again been confirmed.

Also two interesting columns by Laszewski, one on what reform should look like, the other on the politics.

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There are 14 comments.

  1. Thatcher

    Jim P,

    As I have said before, the Obama Administration is unmatched in its employment of the most advanced new lying technologies. Nobody lies as well as they do.

    Perhaps if Obama is gone and little Ceasar in a pantsuit goes down the drain, we might actually be allowed to say what the h#ll is going on. Even report a major train wreck. Until then it’s Olympic Pinocchios for the Obamite team.

    Regards,

    Jim

    • #1
    • November 20, 2015, at 12:37 PM PDT
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  2. Member

    When my husband switched jobs and we had to find new insurance, we could not afford the premiums and made too much to qualify for subsidies – our only choice was a catastrophic bridge insurance until the “exchange” re-opened Nov. 1. It’s still double to what we were paying and not affordable – we found some private insurance with United Healthcare that was still reasonable.

    Small businesses in our area are suffering under the weight of this new system and paying penalties and hiring part time instead to make ends meet.

    • #2
    • November 20, 2015, at 12:42 PM PDT
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  3. Thatcher

    Front Seat Cat:When my husband switched jobs and we had to find new insurance, we could not afford the premiums and made too much to qualify for subsidies – our only choice was a catastrophic bridge insurance until the “exchange” re-opened Nov. 1. It’s still double to what we were paying and not affordable – we found some private insurance with United Healthcare that was still reasonable.

    Small businesses in our area are suffering under the weight of this new system and paying penalties and hiring part time instead to make ends meet.

    FSC,

    This has been going on since the beginning. Also, I wouldn’t just accept as a given that this giant Rube Goldberg is actually helping the poorest. Wait times at emergency rooms are up all over. That means whatever way the idiots are calculating things it isn’t solving the problem.

    This whole thing stinks from the bottom to the top. As of yet I haven’t talked to a physician who likes this inane law. Most of the physicians I talk to voted for the [email protected]#rd and a few twice. Yet, they don’t have a single thing good to say about the ACA.

    Regards,

    Jim

    • #3
    • November 20, 2015, at 1:07 PM PDT
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  4. Coolidge

    James Gawron: Wait times at emergency rooms are up all over. That means whatever way the idiots are calculating things it isn’t solving the problem.

    If this is the case now, and if it was the OCare authors’ intent all along to put forth a plan that would fail in order to get the public to accept single-payer, imagine the wait times that would result from that fiasco. Except it wouldn’t be just the emergency rooms. It would be every doctor’s office throughout the land.

    • #4
    • November 20, 2015, at 2:07 PM PDT
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  5. Inactive

    Here now, it’s not all doom and gloom out there. Thanks to Obamacare, we’ve found out the real cost of a doctor visit. Our doctor gives a 50% discount for cash. 50%!

    Oh, and when my son (well, both of them) were going through concussion treatment, we paid cash. That doctor gave a 30% discount.

    Other than very short term “non-compliant” catastrophic insurance to cover the past two high school football seasons, we’ve been without health insurance. Last year we flipped Obama the bird, and are doing the same this year. Why? Because we can’t (non-CoC compliant expletive) afford it, and it’s cheaper for us to pay cash, pay the penalty and carry a true catastrophic plan.

    • #5
    • November 20, 2015, at 2:22 PM PDT
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  6. Inactive

    livingthehighlife:Here now, it’s not all doom and gloom out there. Thanks to Obamacare, we’ve found out the real cost of a doctor visit. Our doctor gives a 50% discount for cash. 50%!

    Oh, and when my son (well, both of them) were going through concussion treatment, we paid cash. That doctor gave a 30% discount.

    Other than very short term “non-compliant” catastrophic insurance to cover the past two high school football seasons, we’ve been without health insurance. Last year we flipped Obama the bird, and are doing the same this year. Why? Because we can’t (non-CoC compliant expletive) afford it, and it’s cheaper for us to pay cash, pay the penalty and carry a true catastrophic plan.

    Unless your doctor does not participate with any government insurance programs, (s)he is breaking the law by not charging you the standard fee. I mention this just in case you are under the misapprehension there are any market forces whatsoever allowed in the regulated practice of medicine in the United States (formerly the land of the free).

    • #6
    • November 20, 2015, at 2:49 PM PDT
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  7. Thatcher

    UHC and the other major health insurers always anticipated that the short-fall in enrollment of the young and healthy would probably fall short of the numbers needed to make the plans profitable. That was what the “risk corridors” were all about. Ultimately Obamacare exchanges were supposed to be a cost-plus government contract with a guaranteed profit.

    The Republican majorities in House and Senate are blocking (so far) these hidden subsidies. We will see if the Republicans are serious about letting Obamacare collapse of its own weight or whether they are just shaking down the health insurance industry for that sweet, sweet cash.

    Bailout of Obamacare Insurers

    • #7
    • November 20, 2015, at 2:55 PM PDT
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  8. Member

    The ACA was a ruse to arrive ultimately to single payer. It’s failure is right on schedule.

    • #8
    • November 20, 2015, at 4:52 PM PDT
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  9. Member

    Pilgrim:The Republican majorities in House and Senate are blocking (so far) these hidden subsidies. We will see if the Republicans are serious about letting Obamacare collapse of its own weight or whether they are just shaking down the health insurance industry for that sweet, sweet cash.

    Gasp! You aren’t suggesting that the Republicans who “represent” us would sell us out for filthy lucre?! Naturally they’ll stick to principle and would never throw their constituents under a bus at the drop of a (lobbyist’s) dime.

    • #9
    • November 20, 2015, at 4:56 PM PDT
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  10. Member

    PHCheese:The ACA was a ruse to arrive ultimately to single payer. It’s failure is right on schedule.

    The failure is right on schedule in more ways than one – healthcare, military, race relations, law enforcement, relations with allies, Common Core, the national debt, trade relations that benefit the U.S., we could keep going…….

    • #10
    • November 20, 2015, at 6:34 PM PDT
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  11. Inactive

    James Pethokoukis: A Goldman Sachs Group Inc. analysis of state filings for 30 not-for-profit Blue Cross and Blue Shield insurers found that their overall companywide results were “barely break-even” for the first half of 2015.

    I have little doubt that many Obama supporters and administration figures think breaking even is fine. Why should any corporation make money on someone else’s illnesses? And why should any non-for-profit do better than break even ever!

    • #11
    • November 21, 2015, at 11:41 AM PDT
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  12. Member

    Under no circumstances am I going to support a bailout of these insurance companies. I just hope a Republican wins the white house next year, because we need to end Obamacare and get real healthcare reform. It should be in his top three priorities.

    • #12
    • November 21, 2015, at 5:02 PM PDT
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  13. Inactive

    At this point single-payer is dream compared to the British NHS system that is coming our way. Large healthcare groups are gobbling up independent practices and consolidating. In 5 years there will be maybe 100 healthcare groups around the country. It will be a very short step to just nationalize those 100 healthcare groups and then your family practitioner will be a civil servant.

    • #13
    • November 21, 2015, at 7:02 PM PDT
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  14. Member

    civil westman:

    Unless your doctor does not participate with any government insurance programs, (s)he is breaking the law by not charging you the standard fee. I mention this just in case you are under the misapprehension there are any market forces whatsoever allowed in the regulated practice of medicine in the United States (formerly the land of the free).

    Henry Ford hospital’s webpage for the uninsured or those who’s insurance does not cover MRIs or Xrays states the price is based on Medicare payment schedules. The highest MRI is just over $700 with the dr. price included. So there are two prices. I have often thought that private health insurance subsidized Medicare/Medicaid.

    http://www.henryford.com/body.cfm?id=47782

    • #14
    • November 22, 2015, at 2:40 PM PDT
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