October 14, 2016

ED MORRISSEY: Minnesota Could Be the First Obamacare Domino to Fall.

As the Star Tribune notes, all seven of the remaining insurers in the state had threatened to follow Preferred One out the door without the massive rate hikes. Even with Rothman surrendering to the realities of centrally controlled economies, Blue Cross Blue Shield will still exit Mnsure at the end of 2016. The massive price hikes, Rothman said in September, were “a stopgap for 2017.” Foreshadowing Dayton’s announcement on Wednesday, Rothman added, “It’s an emergency situation – we worked hard and avoided a collapse.”

Avoided? As Dayton made clear yesterday, all Minnesota has done is postpone a collapse – and probably for only another year. The biggest problem for insurers in these markets is the unstable utilization rates, which prevent them from accurately calculating risk to set a tenable premium price.

The reason for that instability is that higher prices are disincentivizing healthier consumers from buying expensive comprehensive insurance policies as they opt instead to pay out of pocket for their minimal utilization and pay the tax penalty for non-coverage instead. Thanks to skyrocketing premiums and deductible thresholds, the likelihood of many consumers to have benefits applied to anything but a basic wellness check is remote at best, which makes the risk worthwhile.

Leave it to Big Government to coerce a market into existence, where individuals are required to buy a product they can’t afford to use, and which producers can’t afford to sell — and then blame the free market for the inevitable collapse.

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