There’s a pointy bit of ice showing in Minnesota, which might just prove to be the tip of an embarrassing iceberg:
A year ago, PreferredOne looked like an Obamacare success story: The Minnesota health plan offered some of the lowest premiums in the country and captured 60 percent of the state’s roughly 55,000 new Obamacare enrollees. But those premiums were too low, it turns out, to cover the medical care and other expenses of all those new customers. In the fall, PreferredOne steeply hiked rates for 2015 and dropped out of Minnesota’s Affordable Care Act marketplace entirely, saying it was “not sustainable” to continue.
Now roughly 12,000 people who bought PreferredOne policies in 2014 and haven’t switched plans will face bigger insurance bills this year, according to Joe Campbell, communications and marketing director for MNsure, the state’s Obamacare marketplace. By law, customers who enrolled will automatically be renewed in coverage plans at the new, higher premiums. And those who were getting subsidies to make premiums more affordable will lose them, because the assistance is available only for plans sold through the Obamacare markets. A spokesman for PreferredOne declined to comment for this story.
There were warning signs a year or two ago* that fly-by-night operators would open up on the exchanges, offer too-good-to-be-true premiums, then fold up shop. And why not? With ♡bamaCare!!!’s risk corridors**, their losses would be covered during the transition period from expensive-but-comprehensive private insurance, to ♡bamaCare!!!’s expensive-but-craptaculent plans.
Along that vein, the BusinessWeek story continues:
Across the U.S., at least 77 insurers joined Obamacare markets this year, which increases competition and helps keep overall rate increases modest. But 14 companies that sold coverage for 2014 left the marketplaces, according to a government tally. And other insurers have faltered: A nonprofit co-op health plan in Iowa that got $145 million in government loans was placed under supervision by regulators last month because it’s running out of money, Bloomberg News reported. But outside of Minnesota, no company withdrew after winning as much of the market as PreferredOne did.
Tip of the iceberg? Too soon to say. But if it turns out to be, the Germans are going to need coin us a new and even bigger word combining “schadenfreude” with “I told you so.”
*A quick Bing search for “bait and switch ♡bamaCare!!! exchanges” produced too many hits to be useful, and I’m already late for my shower. I’ll dig into this again later today.
**Taxpayer-funded slush funds for insurance companies.