Private health insurers made a Faustian bargain with Democrats in 2010: In return for supporting passage of the Affordable Care Act, the companies would be able to grow their business with subsidized customers who were required to buy insurance. How’s that working out?
Except for Dr. Faustus, not great. Democrats lost control of the House and Senate thanks in considerable part to their votes passing ObamaCare on partisan lines. And now we’re learning that private health insurers are losing money on their Affordable Care Act business, as Aetna was the latest to acknowledge on Monday during its quarterly earnings report.
The head of the third-biggest U.S. health insurer said he has “serious concerns” about whether or not ObamaCare’s new markets are sustainable, echoing criticism from other top for-profit insurers.
“We continue to have serious concerns about the sustainability of the public exchanges,” Aetna Inc. Chief Executive Officer Mark Bertolini said on a call Monday while discussing the company’s fourth-quarter results. “We remain concerned about the overall stability of the risk pool.”
Large U.S. health insurers have faced a rocky start in the Patient Protection and Affordable Care Act, which in 2014 opened up new markets where millions of Americans buy coverage, often with tax subsidies to help them afford it. Aetna is one of the biggest insurers in ObamaCare and, like its rivals UnitedHealth Group Inc. and Anthem Inc., has struggled to make a profit in the business.
Daniel Mitchell at the Cato Institute has proposed a “golden fiscal rule:” ensure that government spending, over time, grows more slowly than the private economy. This is an idea that should command support from fiscal conservatives on both sides of the aisle, not just libertarians.
Mr. Mitchell has done a more than adequate job demonstrating that “nations that imposed genuine spending restraint for multiyear periods reaped big benefits.” But we also know that growth in federal health spending continues to outstrip growth in the economy. As I have stated repeatedly in other posts, ObamaCare has not eliminated the nation’s long term spending problem. My purpose in this post is to show how dramatically non-health spending (including defense) if we were to adopt the golden fiscal rule.