Motley Fool’s Sean Williams sums up ♡bamaCare!!!’s woes, and wonders if the Totally Settled Law of the Land™’s insurance exchanges can avoid a death spiral:
Health insurers were counting on strong enrollment figures, as the ACA limits their margins and thus their profitability. If insurers fail to spend at least 80% of collected premiums on medical care for their members, they’ll be required to issue refunds to members. Likewise, if they’re too profitable, they’re to share a percentage of their profits with struggling insurers on Obamacare exchanges to help prop them up. Original estimates from the Congressional Budget Office suggested that more than 20 million people would be enrolled by 2016. Unfortunately for insurers, the CBO overestimated how many people would drop out of their employer plans and opt for Obamacare. In other words, far fewer people have enrolled than expected.
Secondly, health-benefit providers need a fair amount of young adults to enroll, and that’s not happening. Young adults are often healthier and less likely to go to the doctor, therefore their premiums can be used to help offset the high costs of care for sicker and/or older individuals. Threats of penalties in the form of the individual mandate were expected to prompt young adults to enroll, but paying the penalty is typically far less expensive than purchasing health insurance for a full year, even after two huge penalty hikes in 2015 and 2016.
Third, the “risk corridor” that overly profitable insurers were expected to pay into to help struggling insurers has been a disaster. This year, insurers requested $2.87 billion in assistance but received just $362 million — almost a $2.5 billion shortfall. This lack of assistance led more than half of Obamacare’s healthcare cooperative to shutter their doors, and it could seriously discourage new entrants.
Lastly, part of the problem comes down to the consumer. Americans could be denied coverage for pre-existing conditions prior to Obamacare’s implementation. Under Obamacare, insurers can’t deny coverage to anyone, meaning those sicker individuals on the sidelines have now rushed into the healthcare system.
I would point out only that Longtime Sharp VodkaPundit Readers™ were aware of every single one of these pitfalls before last year’s lame enrollment figures were released, before the exchanges opened for business, and indeed before the “Affordable” Care Act was even singed into law.
And it isn’t as though I had any special insight. Any number of right-leaning think tanks and writers and bloggers issued the the same or similar warnings, going all the way back to 2009 — when President Obama and his cronies were still issuing the daily pravda about saving you $2,500 a year while letting you keep your doctor and your plan.
Given the billions wasted, the people shut out of their previous choices, the growth-and jobs-snuffing taxes, and all the rest, there’s really no satisfaction in being proven right.
Maybe at least we’ll learn to be a more-effective opposition to the next wave of collectivism.