ObamaCare's Terrible, Horrible, No Good, Very Bad Week
Over at The Motley Fool, Sean Williams has a lengthy analysis of ObamaCare's many woes, but the meat of the matter comes down to two things -- a lack of money and a lack of healthy paying customers.
Obamacare was expected to enroll 21 million new people by the end of 2016, at least according to projections from the Congressional Budget Office in 2013. Currently, this figure is about 10 million shy of the CBO's projections from three years ago, and it could fall further as attrition due to non-payment continues. Having fewer enrollees than initially expected is certainly not an ideal picture for insurers when the margins associated with Obamacare enrollees are typically much narrower than through other forms of enrollment. The smaller scale will likely only hurt profitability.
Obamacare enrollees have also tended to be a costlier, sicker group of individuals. According to a large analysis conducted by the Blue Cross Blue Shield Association, Obamacare enrollees cost, on average, 22% more per month than persons enrolled in an employer-sponsored health plan. This probably isn't too much of a shock considering that prior to Obamacare there were rules in place that allowed insurers to turn away people with pre-existing conditions. Under Obamacare, insurers can't do this anymore, meaning sicker individuals have been among the first to enroll, leaving insurers with an adverse patient pool.
The risk corridor has also been an utter failure.
You were warned, repeatedly, before ObamaCare was even signed into law, that its perverse incentives would lead to a insurance pool too small and too old and too sick to be sustainable. So other than another "I told you so," there really isn't much to add to the first and second paragraphs.
Now about that "utter failure" of a risk corridor...
We discussed those here a few weeks back, about how they made innovation "punishable by being forced to turn your money over to less efficient competitors." And if there's one thing at which ObamaCare is increasingly successful, it's punishing innovation. For yet another example, we now go to New Mexico:
A New Mexico health insurer is suing the Obama administration, claiming rules implemented under the Affordable Care Act require the insurer to pay millions annually to a competitor, Blue Cross and Blue Shield of New Mexico, whose parent company sits on nearly $10 billion in reserves.
“This regulatory dystopia is the equivalent of forcing the local baker who sells cupcakes to neighborhood coffee shops to pay between 14 percent and 22 percent of his revenue to Nabisco,” says the complaint filed Friday by New Mexico Health Connections.
At issue is a U.S. Department of Health and Human Services risk-adjustment model that requires certain health insurers whose members are healthier to pay competitors whose members who aren’t as healthy — and are thus costlier to cover. The model is supposed to free insurers from being financially penalized for taking on less healthy members, allowing them to lower costs and offer more innovative insurance plans.
New Mexico Health Connections argues that it delivers just the type innovative health insurance coverage envisioned by the Affordable Care Act, also known as “Obamacare.” But the company’s federal lawsuit says the U.S. Department of Health and Human Services risk-adjustment model “brutally penalizes new, innovative, low-cost insurance companies and flouts Congress’s intent” in enacting the Affordable Care Act.
"Congress's intent?" About that...