Healthcare insurers are heading for the exits. The first to pack up nearly all their states and leave was UnitedHealth. Humana is also leaving many states. Blue Cross Blue Shield may be next.
In an interview with WRAL’s David Crabtree, Blue Cross Blue Shield North Carolina (BCBSNC) CEO Brad Wilson stated that he gives ObamaCare a D+ grade for its performance in North Carolina. Although he concedes it has increased coverage for about 500,000 North Carolinians, its financial stability is on the rocks.
Wilson admitted he was considering pulling out of the North Carolina ObamaCare exchange in 2017. This would leave North Carolinians in 60 counties without coverage. He explained his reasons for this with a detailed accounting:
- 450,000 BCBSNC members covered on the exchange
- The top 5% brought in revenues of $108 million
- The same 5% generated bills of $1.3 billion
- Despite revenues from the other 95%, the company lost $282 million
Wilson says the company is looking for a way forward and has not yet filed for rate increases for 2017. He expects this determination to be made by the end of the summer. Some cynics have suggested this is just posturing to gain approval for higher premiums next year.
The same was said about UnitedHealth when they first expressed an interest in leaving the exchanges in November, 2015. But UnitedHealth did follow through with their threat, pulling out of 27 state exchanges for 2017. They remain in only six states.
Suggestions For Improvement
Wilson makes four suggestions on how to improve ObamaCare:
- Vigorously enforce the Individual Mandate
- Shrink the number of Special Enrollment Periods
- Shrink the time period within which premium payments are due
- The federal government should pay insurers the risk corridor amounts that are due under the ACA
These may seem like common sense measures to the uninitiated. But none of these will solve the real problems of ObamaCare. Here’s why:
- Better enforcement of the Individual Mandate won’t make people pay ridiculously high premiums and deductibles when the penalty for non-compliance is so much lower. ObamaCare is a very bad value unless you get a large government subsidy.
- Fewer Special Enrollment Periods and less time to pay the premiums might discourage gaming of the system but it still won’t make ObamaCare a good value.
- The risk corridor provision of ObamaCare is supposed to be budget neutral. Insurers who make a profit pay into the system so losers can be bailed out. But there have been far more losers than winners so there’s very little money to be paid out to losers. In 2015 losses of $2.9 billion were reported and only $390 million in profits. That left about $2.5 billion in losses that could not be bailed out. The Obama administration tried to change the law and bail out the insurers anyway but fortunately Senator Marco Rubio blocked this in the Senate.
In a recent update of this interview, Chris Conover of Forbes, writes that BCBSNC has requested an 18.8% rate increase. If the company fails to get approval and exits the state exchanges, he expects Wilson’s grade for ObamaCare will turn from D+ to an F. That’s a grade everyone should be giving this failed healthcare law.