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.
Before you try a short-term plan, consider the pros and cons:
- You can buy them any time of year.
- Their premiums are generally lower than major medical insurance plans. The average premium for short-term plans sold by eHealth in California last year was $177 per month, Purpura says.
- They may have broader networks of doctors and hospitals than some plans available from exchanges.
- They won’t accept you if you have pre-existing conditions, or if they do, they won’t cover them.
- They may not cover benefits such as maternity care, preventive services or prescription drugs. Some may offer drug or dental discount plans, but those aren’t the same as insurance.
- They last less than a year and you have to reapply at the end of each term. There’s no guarantee you’ll be accepted again, especially if you got seriously ill while you had coverage.
Criticism of the Obama administration’s implementation of ObamaCare from the administration’s critics is not particularly surprising. There’s not much newsworthy about an administration taking fire from across the aisle. It is more notable when a prominent defender of the Obama administration acknowledges that the administration has colored outside the lines, and not always with good justification. So those interested in the Affordable Care Act and the administrative law should give Nicholas Bagley’s new paper on“Legal Limits and the Implementation of the Affordable Care Act” a careful read.
We shouldn’t be surprised that health insurance premiums continue to rise at record rates — by 15-20% for many employers and their employees in 2016 alone. Between private insurance, Medicare and Medicaid, the number of insured Americans has grown dramatically to nearly 90% of the population. While more people than ever before are seeking health care services since the passage of ObamaCare the supply of physicians, hospitals and outpatient treatment facilities has not kept pace.
It is a fundamental concept of economics that when demand is increased and supply is restricted, prices rise. But for more than 40 years, state and federal governments have used a heavy hand to limit the supply of new doctors and hospitals entering the market, as well as facility expansions and equipment purchases.
Blue Cross and Blue Shield of NC is expecting to lose more than $400 million on its first two years of Obamacare business. According to this morning’s News and Observer, “The dramatic deterioration in Blue Cross’ ACA business is causing increasing alarm among agents and public health officials.” In response to its bleak experience with the ObamaCare exchange, the company has decided to eliminate sales commissions for agents, terminate advertising of ObamaCare policies, and stop accepting applications on-line through a web link that provides insurance price quotes–all moves calculated to limited ObamaCare enrollment.
Chris Conover of Duke University’s Center for Health Policy & Inequalities Research explains what we can learn from North Carolina’s experience.
Freedom Partners Chamber of Commerce has analyzed all publicly available information for health-insurance premiums from healthcare.gov and state insurance departments. It then calculated the weighted averages for all health-insurance plans available on the Affordable Care Act’s exchanges. The weighted average gives a more accurate view of overall premium increases, because it takes into account each insurance plan’s market share.
Findings reveal that nationally, premiums for individual health plans increased on average between 2015 and 2016 by 14.9%. Consumers in every state except Mississippi faced increased premiums, and in no fewer than 29 states the average increases were in the double digits. For a third of states, the average premiums rose 20% or more.
The third open-enrollment season for health plans under the Affordable Care Act moved into its final hours Sunday night with little fanfare from Obama administration officials who had been urging consumers to buy insurance.
It was unclear whether the close of the three-month enrollment window drew any stampede of last-minute shoppers on HealthCare.gov, as was the case during the first two sign-up years. In each of those, federal health officials trumpeted a late surge of people choosing health plans as evidence of Americans’ eagerness for coverage.
But on Sunday, the officials provided no figures about the final weekend’s volume of traffic on the federal insurance website.
Eliminating the artificially low limits on FSA accounts would provide significant benefits to families with special-needs children, diabetics, and employees who – or whose families – need vision, hearing, dental or orthodontic care, or any other health care not normally covered by health insurance. It would also lessen the pain of higher health insurance deductibles and other patient cost-sharing, which could even reduce insurance premiums, and therefore federal premium subsidies. The result would be substantial help with health care expenses to families who need it most, with a minimal impact to the federal budget.
In addition, eliminating the FSA “use it or lose it” rules would provide benefits to those same families and many more, while at the same time eliminating wasteful health care spending and possibly reducing health insurance premiums, with almost no