ObamaCare and the November 1 Insurer Waiting Game

Many consumers will see large rate increases for the first time Nov.1 – a week before they go to the polls. Proposed rate hikes are just starting to dribble out, setting up a battle over health insur”ance costs in a tumultuous presidential election year that will decide the fate of ObamaCare.

Paul Demko, “ObamaCare’s November Surprise,” Politico, May 2, 2016

As the September Song lyrics go,

“Oh, it's a long, long while from May to December
But the days grow short when you reach September
When the autumn weather turns the leaves to flame
One hasn't got time for the waiting game.”

The Obama administration and the Hillary Clinton campaign are anxiously awaiting health insurers announcement  for premiums hikes on November 1, 2016. 

The last thing Democrats want just a week before the Presidential election  are double-digit insurance hikes as millions of Americans begin signing up for ObamaCare.   Premium hikes are expected to average over 10% - 15%as compared to an average of 8% in 2016.  Dramatic spikes of 20% to 50% have already been requested in New Mexico, Maryland,  Tennessee, and North Carolina.

Insurers' Problems

The insurers’ problems are two fold:

One, they have been unable to choose who to insure.

Two, they do not know how much to charge because they cannot, based on medical histories.

So insurers have been shooting in the dark.  They have experienced heavy losses on ObamaCare  exchanges.   UnitedHealth, the nation’s largest insurer, pulled out of exchanges in 34 states,  after suffering losses of $475 million in 2015 and a projected $650 million in 2016.    Aetna  says it expects to break even in 2016, but legislative fixes are needed if it is to stay in the game.  Blue Cross Blue Shield will remain in 14 states has also experienced heavy losses but says  will continue to insure exchange customers, as will Anthem and Centene,  the nation’s largest Medicaid insurer.

The future of ObamaCare is at stake if voters reject Democrats at the election.  Republicans  have announced they will repeal ObamaCare.   The GOP has already denounced ObamaCare as unworkable because of the UnitedHealth decision,  but have yet to announce an alternative to ObamaCare.    

Many critics have said ObamaCare insurance markets are unstable, unsustainable, and unworkable.      Blue Cross and Blue Shield pans have seen profits plunge by 75% , mostly in the exchange segment of their businesses.   Over half of 23 nonprofit insurer startup have collapsed.   One  big reason behind these losses  is the lower-than-expected enrollment of younger healthier people, who reject the exchanges as a bad business deal and who resent paying for the sick.   Just 28%  of Healthcare.gov customers  were between 18 and 34, far below the 35% needed for a balanced marketplace.

Another reason is that only 12.7 million Americans  signed up during the recent enrollment period  compared to the22 million projected by the Congressional Business Office.

The Obama administration and some insurers say the market will stabilize, but the voters may not be so sure, and they may vote their pocketbooks.  From May to November may not be enough time for markets to stabilize.  Sooner or later,  I expect ObamaCare to disintegrate, to collapse under the weight its economic misunderstandings and its failure to deliver on its premises (ultimately universal coverage) and its promises (choices of doctors and health plans,  lower premiums and deductibles, and greater quality and access).