Mr. President, we need answers on Obamacare
For anyone involved with the Affordable Care Act, yesterday was a big day.
It's the day any vestige of the notion that the Obamacare insurance exchanges have a chance of being successful in their current form lost whatever credibility was remaining.
The nation's biggest insurance company, with more than half of its earnings tied to its relationship to the federal government, just announced that it has had enough of Obamacare and if it isn't fixed in the next few months it is going to bail.
The company reported earnings pressure, driven by projected losses on individual exchange-compliant products related to the 2015 and 2016 policy years.
So much for the outwardly vocal support for Obamacare we have heard from the insurance industry since the program launched two years ago.
And it's not just UnitedHealth Group (NYSE: UNH) that is having very serious red ink problems over Obamacare.
Goldman Sachs (NYSE: GSBD) just reported that the thirty not-for-profit Blue Cross plans are expected to lose money as a group for the first time since the 1980s—with the Obamacare exchanges being the key driver.
Already, 12 of the 23 Obamacare created health insurance co-ops have become insolvent with almost all of the rest losing money—100 percent of their business is Obamacare business.
The Obama administration itself has reported that in its risk corridor reinsurance program, the carriers losing money are doing so at a rate eight times larger than the few carriers that are making money.
As the Obamacare 2016 open-enrollment period has begun, Obamacare has hit a bad trifecta of higher rates, bigger deductibles, and fewer provider choices:
McKinsey just reported that the median rate increase for the lowest priced popular benchmark Silver plans is 11 percent, compared to 7 percent in 2015.
The second most popular plans, Bronze, are seeing a median increase of 13 percent and Gold is seeing a 15 percent increase.
Meanwhile, according to HealthPocket, Bronze deductibles are rising on the Obamacare federal exchanges by an average of 11 percent to $5,731 and Silver Plan deductibles are rising by 6 percent to an average of $3,117.
What's more, the Robert Wood Johnson Foundation found that 67 percent of exchange health insurance companies either dropped or reduced their provider network choices for 2016.
And, yet, most health insurers are still expecting to lose money in Obamacare for 2016!
Now, we are all waiting for the Obama administration's reaction to the UnitedHealth announcement to see if they remain in their usual spin and denial mode telling us that Obamacare is a terrific success.
Instead, going forward we need the administration to start to tell us how they are going to make Obamacare work for everyone—not just the too few people who have so far signed up for it.
Commentary by Robert Laszewski, the president of Health Policy and Strategy Associates, LLC, who has twenty years of experience in the insurance industry, serving as a chief operating officer for nine of those years, before beginning his Washington, D.C. policy and market consulting business.
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