The Spiral Deepens

It was all too predictable. So predictable in fact that it was either complete ignorance or completely ideological. With Liberals it could be both.

Adverse Selection said it was inevitable.

Health insurance companies are amplifying their warnings about the financial sustainability of the ObamaCare marketplaces as they seek approval for premium increases next year. Insurers say they are losing money on their ObamaCare plans at a rapid rate, and some have begun to talk about dropping out of the marketplaces altogether. “Something has to give,” said Larry Levitt, an expert on the health law at the Kaiser Family Foundation. “Either insurers will drop out or insurers will raise premiums.” While analysts expect the market to stabilize once premiums rise and more young, healthy people sign up, some observers have not ruled out the possibility of a collapse of the market, known in insurance parlance as a “death spiral.” In the short term, there is a growing likelihood that insurers will push for substantial premium increases, creating a political problem for Democrats in an election year. Insurers have been pounding the drum about problems with ObamaCare pricing.

a new study by the Blue Cross Blue Shield Association provides some answers.The study, released on March 30, found that people who enrolled in BCBS after the Affordable Care Act became law had higher rates of disease than those who’d been enrolled before ObamaCare took effect, suggesting insurers indeed are taking on higher-risk and higher-cost patients. Their costs are rising, along with premiums in general.

The study claims to represent “a comprehensive, in-depth study of actual medical claims among those enrolled.” Blue Cross Blue Shield represents more patients in the health insurance exchanges than any other insurer.

The study found:

  • New enrollees in individual health plans in 2014 and 2015 had higher rates of hypertension, diabetes, depression, coronary artery disease, HIV and Hepatitis C than those enrolled before ObamaCare.
  • New enrollees received significantly more medical care, on average, than those with individual or employer-based plans.
  • New enrollees had more inpatient admissions, outpatient visits, prescriptions filled and emergency room visits.
  • Medical costs for new members were, on average, 19 percent higher than for employer-based members in 2014, and 22 percent higher last year. Average monthly medical spending for those newly enrolled members also rose at a higher rate in that period.

“The findings underscore the need for all of us in the health care system, and newly insured consumers, to work together to make sure that people get the right health care service in the right care setting and at the right time,” said Alissa Fox, senior vice president for BCBSA, in a press release.

A report from Freedom Partners earlier this year showed premiums on the individual market are rising by double digits in most states. (FOX)

The “death spiral” begins churning downward when young, healthy people decline to sign up for expensive plans, leaving older, sicker consumers as a disproportionate percentage of health market risk pools. When insurers incur additional losses as a result, they try to compensate by raising rates further (or withdraw from the marketplaces altogether), driving even more of the “desired” consumers away. The problem compounds itself until the risk pools collapse. Given Obamacare’s the worse-than-expected enrollment figures and much-discussed warnings from major insurers, a slow death spiral is by no means out of the question. The article says that analysts expect the market “to stabilize” when rates increase and more young people sign up. But the former is likely to serve as a major deterrent to the latter.  More:

The Blue Cross Blue Shield Association released a widely publicized report last month that said new enrollees under ObamaCare had 22 percent higher medical costs than people who received coverage from employers. And a report from McKinsey & Company found that in the individual market, which includes the ObamaCare marketplaces, insurers lost money in 41 states in 2014, and were only profitable in 9 states. “We continue to have serious concerns about the sustainability of the public exchanges,” Mark Bertolini, the CEO of Aetna, said in February. The Aetna CEO noted concerns about the “risk pool,” which refers to the balance of healthy and sick enrollees in a plan. The makeup of the ObamaCare risk pools has been sicker and costlier than insurers hoped. The clearest remedy for the losses is for insurers to raise premiums, perhaps by large amounts — something Republicans have long warned would happen under the healthcare law, known as the Affordable Care Act (ACA). “The industry is clearly setting the stage for bigger premium increases in 2017,” said Levitt of the Kaiser Family Foundation.

Unstable risk pools and soaring rates (and out of pocket costs). Who could have seen this coming? Aside, that is, from virtually every single Obamacare critic in America — who have been consistently vindicated by events.  The “Affordable” Care Act at work, America.  Send your thank you notes to President Obama…and Hillary Clinton.  Philip Klein was right: Obamacare is off to a very rough start in 2016, and it appears to be getting worse. (Guy Benson)

But I have said since the beginning of this blog in 2009 that it was DESIGNED to fail so that the Government could step in and “save everyone” from the evils of capitalism. Mind you they gave it more than shove- more like a galactic DUI and then a 2X4 to the head the size of Texas. All by design.

You have to kill the patient, before you can save it. 🙂




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