A?week or so ago we ran a story about Physicians Health Plan of Northern Indiana leaving the individual-insurance marketplace.
Existing individual customers of theirs will have insurance through Dec. 31. They’ll keep serving small- and large-group markets.
PHP says individual policies have been money losers: “In 2016, for every premium dollar received, we estimate PHP will pay $1.20 for medical expenses. We estimate this number would increase to $1.36 in 2017,” PHP said in a news release.
This is no surprise because it follows news of major health care providers nationwide who have abandoned the Affordable Care Act exchanges, more commonly known as Obamacare.
Major insurers like United Health and Aetna, that is.
For the second quarter of 2016, Obamacare cost Aetna a “pretax loss of $200 million and total pretax losses of more than $430 million since January 2014,” Aetna CEO Mark Bertolini said in a statement earlier this month.
And for insurers that are staying in, premiums are going up by double digits.
But didn’t President Obama say that one of the principle reasons for Obamacare was to spare us all from “double-digit premium increases year after year.”
Yeah, he did.
The converse has become the norm.
According to an article on Forbes.com from last summer, Blue Cross Blue Shield of Minnesota was asking for a 51 percent rate hike, Fallong Community Health Plan in Massachusetts was seeking 21 percent, CareFirst in Maryland wanted 34 percent and Blue Cross Blue Shield of Illinois needed 29 percent.
That was last year and this year likely won’t be much better
A story on NBC.com says that in Virginia, a state that reports early, nine insurers returning to the marketplace are seeking average premium increases from 9.4 to 37.1 percent.
And all of this follows average increases of around 40 percent in Obamacare’s first year.
Weird that they call it the Affordable Care Act, isn’t it?
But, I guess if you’re one of the 6 or 7 million enrollees who are being subsidized by the federal government, it might actually be affordable.
Spiraling premiums were one of the things that Obamacare detractors warned about at the outset of the program. But what did they know?
Research shows that enrollment is not half of what was expected and that’s not even the worst news.
The penalty was supposed to incentivize people to sign up, but many are not, simply because it’s so much cheaper just to pay the penalty.
Basically, unless you get a big subsidy from the government or have very expensive health conditions, it makes more financial sense for you to pay the fine. You’re literally worse off buying a plan on the exchange than remaining uninsured.
Young and healthy people aren’t signing up, and that was how the exchange was supposed to work – young healthy people paying premiums to offset the costs of unhealthy, low-income people.
But it only makes sense that Obamacare would be fraught with difficulties.
It’s not that there wasn’t a problem that needed attention, there was.
Simply stated, the problem was that there were too many people uninsured.
But the way the Democrats went about it was destined for trouble.
Basically, Obamacare’s architects tried to reinvent the insurance business. Instead of insuring people against something going wrong with their health, the plan was to insure people who already had something wrong with their health. – at the same premium.
It would be like waiting until you wreck you’re car to insure it.
It just can’t work that way.
Government subsidies or not, insurance companies  are paying out more than they take in. The answer? Higher premiums and deductibles that push even more of the young and healthy out of the exchange market.
Then what?
Insurers opt out of the program.
So let’s do some basic math, just for fun.
The point of Obamacare was to get people insured. Fair enough.
Before Obamacare, there were 48 million people in the US uninsured.
After the first five years of Obamacare, 11.7 million people signed up through the exchanges, 10.8 million people went on Medicaid and another 3 million went on their parents’ plans.
That means 22.8 million people are now insured that weren’t insured before Obamacare.
Cost of the program is hard to pin down. The government’s best guess is around $1.5 trillion over 10 years, but private research firms estimate it could be as high as $3 trillion.
For the sake of argument, let’s go with the modest, $1.5 trillion.
That means that the government could have written a $31,250 check to each of the 48 million uninsured people in America. That amounts to $3,125 per year ($260 per month) to offset health insurance. costs. That’s per person, so a family of four would have received $1.040
If the cost was really closer to $3 trillion you could double the size of that check to $520 a month or $2,080 for a family of four.
And since only $22.8 million are signed up so far, the government could have written each of them a check for $65,798.50.
And we wouldn’t have had to upend the entire health care system in America.
I am not suggesting writing checks is sound public policy, but it does illustrate the folly of Obamacare as it relates to a cost-to-benefit ratio.
Looks like the government got it a little wrong in its attempt at reforming something as complex and vast as the US health care system.
Who could have seen that coming?