Here’s some bad news for the insurance industry: Unexpectedly generous corporate subsidies didn’t save companies selling ObamaCare policies from bleeding red ink. The worse news: Those subsidies are set to expire in 2017, meaning that insurers will have to make ends meet without billions in handouts.
Those are among the matters discussed in a study by the Mercatus Center, authored by Brian Blase, Edmund Haislmaier, and Doug Badger. Thestudy, based on detailed data derived from insurer regulatory filings for the 2014 benefit year, finds that companies that sold ObamaCare plans in the individual market lost more than $2.2 billion, despite receiving $6.7 billion (an average of $833 per enrollee) in “reinsurance” subsidies. Those reinsurance payments were 40 percent more generous on a per-enrollee basis than insurers had expected when they set their 2014 premiums.
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Even before President Obama leaves office, ObamaCare has begun unraveling.
The law was passed over the objections of a majority of Americans, it is still opposed by a majority of Americans — and their opposition has been vindicated. Last week, UnitedHealth Group announced that, after estimated losses of more than $1 billion for 2015 and 2016 under ObamaCare, the company was pulling out of most of its ill-fated exchanges. In fact, commercial insurers across the country are hemorrhaging money on ObamaCare at alarming rates.
The president promised these insurers taxpayer bailouts if they lost money, but Congress in its wisdom passed legislation barring the use of taxpayer dollars to prop up the insurers. Without the bailouts, commercial insurers are being forced to eat their losses — while more than half of the ObamaCare nonprofit insurance cooperatives created under the law failed.
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The ACA significantly altered the rules governing the individual insurance market, and the general effect was to lower premiums for older and less healthy people and raise premiums for younger and healthier people. To induce younger and healthier people to enroll, the law contained the individual mandate and subsidies for both buyers and, for the first few years of the program, sellers of insurance in the form of premium stabilization programs.
This study analyzes data from HHS from 2014, the first year of the ACA’s implementation, and finds that insurers suffered significant losses despite eventually receiving much larger payments from the law’s reinsurance program (one of the premium stabilization programs) than they expected when setting their 2014 premiums. Given the same population and same utilization of services from that population, insurers would have had to price average premiums more than 25 percent higher to avoid losses in the absence of the reinsurance program.
While insurers’ performance varied significantly across carriers and states, the large overall losses in 2014 raise questions about the long-term stability of the changes made by the ACA, particularly after 2016 when the reinsurance and risk corridor programs end and premium revenue must be sufficient to cover expenses.
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One provision of the Patient Protection and Affordable Care Act that has been delayed until 2017 is a federal mandate for standard menu items in restaurants and some other venues to contain nutrition labeling.
Drawing on nearly 300,000 respondents from the Behavioral Risk Factor Surveillance System from 30 large cities between 2003 and 2012, we explore the effects of menu mandates. We find that the impact of such labeling requirements on BMI, obesity, and other health-related outcomes is trivial, and, to the extent it exists, it fades out rapidly.
A new note from JPMorgan economist Jesse Edgerton looks at what is happening with Americans who are working part-time for “economic reasons” — or Americans involuntarily working part time. As you can see in the above chart — the red line — the numbers remains elevated despite big declines in the U-3 and U-6 jobless rates. Edgerton:
There has been little recent relationship between the number of “extra” part-time workers and the level of U3 unemployment, questioning the idea that driving U3 down further will reduce involuntary part-time employment. . . In a note last year, we pointed out that the shift strikingly coincided with the passage of the ACA, which included an employer mandate to provide health insurance to employees working 30 or more hours per week. . . passage of the ACA preceded a large and unprecedented shift from workers working more than 30 hours per week to just under 30 hours. We continue to believe that the ACA can explain a significant number of the “extra” involuntary part-time workers.
One of the reasons that ACA Exchange plans are losing money is their inability to attract enough healthy enrollees. Healthy people are, disproportionately, young people. And large numbers of young adults don’t have to enroll in ACA Exchange plans – because the ACA mandates that their parents’ employer provide them with coverage, and that coverage is almost invariably priced lower.
Anyone up to age 26 with a parent who has employer-based health coverage that includes dependents can enroll in the parent’s plan. This is called the “dependent care mandate,” and is a requirement of the ACA. There are no other requirements for this coverage option: the “child” does not have to live with the parent or be financially dependent or a dependent for tax purposes on the parent. The “child” could be employed and eligible for employer-based coverage on his/her own, but elect to take the parent’s coverage if it’s preferable.
Exchanges are being undermined, in part, by the ACA’s dependent care mandate.
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Before the passage of ObamaCare’s 2,400 pages of coercive mandates and profligate spending, the federal government had already largely wrecked the market for individually purchased insurance, in three interconnected ways.
First, it had effectively established two different health insurance markets—employer-based and individually purchased—by treating them differently in the tax code. Second, it had given an attractive tax break for employer-based insurance while denying it for individually purchased insurance (except for the self-employed). Third, having effectively split the market in two while favoring the employer-based side, it had made it hard for people to move from the employer-based market to the individual market, as it had allowed insurers to treat previously covered conditions as “preexisting.”
A popular conservative alternative, then, would repeal every word of ObamaCare while fixing this longstanding inequity in the tax code.
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The so-called “Cadillac Tax” is a 40 percent excise tax on the value of employer-sponsored health coverage that exceeds certain benefit thresholds, estimated to be approximately $10,800 for employee-only plans and $29,100 for family plans when the tax takes effect in 2020.
While the name may imply the tax applies to a few individuals with luxury health coverage, the truth is it extends much further. 175 million Americans – including retirees, low- and moderate-income families, public sector employees, small business owners and the selfemployed – currently depend on employer-sponsored health coverage and they are all at risk.
On behalf of the American Benefits Council, Public Opinion Strategies conducted a nationwide online survey of 1,200 registered voters from January 29 to February 3, 2016. These findings indicate that voter support for the “Cadillac Tax” is dwarfed by support for repeal.
Voters are more likely to re-elect their representative if they voted to repeal the “Cadillac” tax, though a majority of voters say it makes no real difference in their vote, a report out today from the American Benefits Council says.
Overall, 37 percent of voters said their congressman voting to repeal the tax would make them more likely to re-elect their representative, while 16 percent said it would make them less likely to do so. Still, 47 percent said the vote made no difference. The report was released by the Alliance to Fight the 40, a coalition of groups advocating to repeal the tax on high-cost health plans.
When I first answered God’s call to join the Little Sisters of the Poor and vow myself to Him and to the care of the elderly, I never dreamed of the happiness I would experience in serving, living with and caring for the aging poor until God calls them to Himself. I also never thought one day, I would be walking up the white marble steps of the Supreme Court to attend a legal proceeding in which the high court will decide whether the government can force my order to help offer health care services that violate my Catholic faith and that are already available through existing government exchanges.