Many recent press reports have centered around the notion that Republicans are stuck in the mud trying to get their repeal and replace promises moving. That line appeared to be reinforced over last weekend when President Trump said in an interview that the process could draw out into next year. He was likely referring to the fact that the whole process, that includes implementing the replacement, could take well past 2017. Instead, Trump was taken literally by the press looking to write stories about how the whole process was foundering. Speaker Paul Ryan quickly countered in his press briefing that Republicans will legislate a repeal and replace of Obamacare this year.
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Lawmakers will soon grapple with the fact that sick people are expensive to cover, and someone has to pay. However, we must understand that there is no certain cost to health insurance.
What the general discussion about how to cover people in the future is missing is that Obamacare is so flawed that by itself it is manufacturing plan premium levels that are at least 30% to 40% higher than they need to be.
The Obamacare insurance exchanges cover only about 40% of those that are subsidy eligible, when the longstanding insurance industry underwriting rule calls for 75% of an eligible group to be covered in order to have enough healthy people enrolled to pay the costs of the sick. This critical point that is being missed.
What would happen if the plans were more attractive––if people saw value in them? And, if we had 75% of the eligible group signing up as a result, what impact would that have on current premiums?
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After last year’s 4% rate increase, California’s Obamacare insurance exchange rates appear to be catching up to the rest of the country.
The two biggest carriers are raising rates by much more than the average 13.2% increase. Blue Shield said its average increase was 19.9% and Anthem said it would increase rates an average of 17.2%
According to the LA Times, Covered California officials blamed the big increase on the “rising costs of medical care, including specialty drugs, and the end of the mechanism that held down rates for the first three years of Obamacare.”
Well, once again when it comes to Covered California’s explanations, not exactly.
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UnitedHealth Group just announced they expect to lose $700 million in the Obamacare exchanges and are seriously considering withdrawing from the program in the coming year. Why is this happening? Because nowhere near enough healthy people are signing up to pay for the sick. The Robert Wood Johnson Foundation and the Urban Institute have come to largely the same conclusion—enrolling a total of 10 million in the exchanges, based on historic trends, would mean only about 9 million of them would be subsidy eligible. That would amount to only 38% of the 24 million people eligible for a subsidy.