The ObamaCare death spiral continues.(ObamaCare Death Spiral Approaching) An insurance pool that has failed to enroll enough young and healthy patients must now try to enroll more at a time when the prices are rising and the choices are shrinking. This effort will fail.
The expected shrinking choices predicted earlier (Aetna Bailing From ObamaCare Exchanges) are already becoming a reality according to the left-leaning Kaiser Family Foundation. Their recent study predicts there will be just one option for coverage in 31% of all counties in 2017 and only two choices in another 31%. That is a huge decline from 2016 when only 7% of counties had one choice and 29% had two.
It doesn’t take a rocket scientist to predict that the prices in these counties with limited choice will be higher than last year. Insurers will be trying to take advantage of their monopoly to recover losses from last year and anticipated losses next year from absorbing more of the sick into their insurance pool.
Anna Wilde Matthews and Stephanie Armour of The Wall Street Journal say some consumers who don’t get coverage through work might be able to buy health plans outside the exchanges, but many lower-income Americans would not. That’s because the ACA requires them to use the exchanges if they want federal subsidies.
This situation is likely to get worse since large insurers like UnitedHealth, Aetna, and Humana pulled out of the exchanges. Smaller insurers do not have the resources to absorb large losses and would only be able to offer plans at greatly increased prices. Many will avoid the exchanges altogether to avoid insuring the sick who tend to purchase coverage regardless of the price.
As expected, the Obama administration remains undeterred in their praise for ObamaCare. Despite this overwhelming evidence of the implosion of the ACA, their response was this:
“A number of steps remain before the full picture of this year’s marketplace competition is known, but the ACA has greatly expanded the insurance options available to consumers in the individual marketplace,” said Marjorie Connolly, a spokeswoman for the Department of Health and Human Services.
Higher Prices Everywhere
Even where choices remain, the prices are going through the roof. According to the Wall Street Journal editorial board, the average “enrollment-weighted” rate increase, which accounts for market share, is in the range of 18% to 23%. The Congressional Budget Office prediction was only 8%.
They say liberals claim this evidence is anecdotal and premature – and there are certainly bad anecdotes to find, like Geisinger Health System in Pennsylvania, which is asking for a 40% rate increase. The other liberal claim is that insurance commissioners will not allow these high rate increases and consumers can switch to other plans if they do.
While it is possible rates will come down slightly after insurance commissioners review, a reduction from 19.3% to 16.6% (as recently occurred in New York) still leaves consumers with a hefty increase. Furthermore, switching to another plan is no longer possible in the 31% of counties with only one plan and limited in another 31% with only two plans as we learned above.
Liberals also say these increases are meaningless because most people get federal subsidies. In other words, it’s okay by them to let the taxpayer pick up the tab. But in reality only about half of Americans under the age of 65 (Medicare eligibility) without employer-sponsored insurance qualify for a subsidy. The significant portion of the population that doesn’t qualify for subsidies must pay the full price for ObamaCare and has no other options except to decline the coverage and pay a penalty tax for having nothing.
It’s no surprise then that only one of every 50 consumers earning over 400% of the Federal Poverty Level ($47,520) who lacks employer coverage has purchased ObamaCare. The Urban Institute estimates that the median consumer who earns between 400% and 500% of FPL must spend 18% of after-tax income on an ObamaCare plan. No wonder healthy people are refusing to enroll.
It doesn’t have to be this way. The Wall Street Journal editorial board recommends the House Republican “Better Way” project which they say “makes real intellectual progress on such a plan” though Donald Trump hasn’t promoted this idea so far. It’s time for Republicans to tell the people there is a solution to this healthcare crisis.