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.
. . .
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.
. . .
President Barack Obama is calling on taxpayers to shell out more money for his health reform law’s disastrous Medicaid expansion.
The president recently asked Congress to approve $106 billion in new Medicaid spending over the next 10 years. Nevermind that the Congressional Budget Office just concluded that, as is, Medicaid spending will add $1.3 trillion to the federal deficit by 2025. That’s $136 billion more than the agency projected last year.
And it’s not as if those dollars are being spent wisely. Obamacare’s Medicaid expansion is sticking taxpayers with a huge bill while doing little to help low-income Americans actually gain access to high-quality healthcare.
Health insurance subsidies are expected to cost the federal government about $660 billion in 2016, according to the Congressional Budget Office.
Much of the $136 billion in extra health spending stems from “significantly higher” enrollment in Medicaid, the federal health program for low-income people, according to the CBO’s latest annual report on healthcare spending. The estimates do not include spending on people over the age of 65.
The CBO figures also show an 11 percent increase in the cost of ObamaCare subsidies.
Expanded health insurance coverage under the Affordable Care Act, President Barack Obama’s signature legislative legacy, will cost the government more, according to an official study released Thursday. Still, on balance, the measure more than pays for itself.
The nonpartisan Congressional Budget Office said the health care law will cost $1.34 trillion over the coming decade, $136 billion more than the CBO predicted a year ago. That 11 percent hike is mostly caused by higher-than-expected enrollment in the expanded Medicaid program established under the law.
All told, 22 million more people will have health care coverage this year than if the law had never been enacted, CBO said. The measure’s coverage provisions are expected to cost $110 billion this year.
Since the Affordable Care Act was signed into law on March 2010, the Obama administration has changed the law 43 times without Congressional approval. The Galen Institute has been keeping track of these administrative changes, which you can find here.
Apparently another illegal administrative action, which will cost the U.S. Treasury $3.5 billion, can be added to the list. Late last Friday, and conveniently before a long weekend, the Centers for Medicare and Medicaid Services announced in a guidance document it would have $7.7 billion in reinsurance payments to cover the losses Exchange plan insurers incurred in 2015. But CMS is not entitled to $3.5 of the $7.7 billion it is giving away.
According to the Kaiser Family Foundation (KFF), average premiums in the workplace were up 24 percent for individual plans and 27 percent for family plans. The vast majority of privately insured Americans – 9 out of 10 – purchase coverage through their employers.
Cost-sharing grew even faster. KFF reports that the average deductible for all workers was $1,077 in 2015, up from $646 in 2010—a 67 percent increase.
Over the past 5 years, a typical family of four faced 43 percent higher health costs, including both premiums and out-of-pocket expenses. The Milliman Medical Index also shows that employer costs increased by 32 percent, from $10,744 in 2010 to $14,198 in 2015. That’s nearly $3,500 that could have gone into paychecks if health costs had not soared.
Health insurers that sold plans on the exchanges in 2015 and enrolled droves of high-cost members, could haul away as much as $7.7 billion this year, as part of the healthcare law’s reinsurance program.
The CMS released a memo (PDF) late Friday that said the agency expects its jar of reinsurance money will total $7.7 billion. The payouts, to be issued this year, will reflect data from the 2015 benefit year.
Democratic candidate Bernie Sanders recently released his health-care plan: a government-run single-payer system for the U.S., similar to what many European countries have. Criticism of the plan has so far focused on its lack of political feasibility, but there is an even more important reason to be wary: Accounting for costs and tax increases, it would reduce labor supply by 11.6 million. In a struggling economy, with tepid wage growth, hurting employment should be the last thing on any politician’s agenda.
The plan truly promises everything under the sun. Not only will everyone be able to get any medical treatment needed — with no cost at the point of service — but the plan won’t require a terribly high tax increase.
The Obama administration released its proposed budget for 2017 this week. It includes a host of health care-related proposals, including new initiatives to increase access to mental health care, expand opioid abuse treatment, fight antibiotic resistance, address the Zika virus threat, and fund a “cancer moonshot.”
The budget also contains a number of proposals relevant to Affordable Care Act provisions. It proposes providing 100% federal funding for state Medicaid expansions for three years regardless of when the state decides to expand.
It would also modify the high-cost employer health plan (“Cadillac”) tax to take account of geographic differences in health care costs; specifically, it would set the threshold when the tax begins to apply at the greater of the current statutory dollar threshold or a state’s “gold plan average premium.”
The HHS Budget in Brief includes a request for $2.1 billion to fund the federally facilitated marketplaces and oversight of the state marketplaces.
The budget anticipates the collection of $4.335 billion and expenditure of $4.560 billion in 2017 for the transitional reinsurance program.