Denny Weinberg

The Health Insurance industry has long understood that the realities of a stable insurance market would never make us the most popular industry in the nation. On the other hand, turning the overhaul of a business as complex as the Individual Insurance market to politicians with no insurance experience coupled with the need from politicians to "please" their constituents was destined to blow up badly. It most certainly will.

I read the entire 2,000 pages of minutia that is Obamacare. It is a complex array of vaguely related mechanisms, assumptions about motivations and consequences of both harsh and subtle incentives and penalties. Many details are dependent on unknown decisions and solutions that would be determined in future months and years. Every part of the act is dependent upon the perfectly performing assumptions of every other part of the act. There has likely never been a law with so many interdependencies and unproven dynamics. The bottom line: The media/public have no idea how bad the Affordable Care Act (ACA) will be once is it fully digested (or regurgitated) by the American public. Thus far, we have just seen the tip of the iceberg.

Here is what I believe is coming:

1. The website problems will probably get fixed pretty quickly. If our massive federal bureaucracy throws enough resources at it, they will eventually get this done.

2. Unfortunately, all who experienced the private individual insurance market dynamics over the years know that in a guaranteed enrollment structure, the first year individual purchasers will be vastly more health-care-needy than can be managed (not so much young enrollees relative to old, but sick enrollees relative to healthy).

3. Young people likely will not buy in this new market. Why? Because prices of policies for their ages have been radically increased due to the 3:1 rating-by-age limitation (This means that an older individual will pay no more than three times the rate of a younger individual-a radical and overnight change in the way policy pricing works). The young were already very difficult to motivate when the private market targeted them with very low cost policies designed specifically for them-with their needs and their resources in mind. Forget that now. This program assumes each and every young person to be a perfect fit for the new, one-size-fits-all plan-regardless of exact age or life stage. On the other hand, people over age 50 will see this offer as a bargain, as they benefit from the 3:1 rating-by-age structure. They get a huge rate reduction along with enhanced coverages. Longer term, this resulting set of age-mix dynamics is a road-map to disaster.


Denny Weinberg

Denny Weinberg is Co-Founder of Wellpoint and a 20 year veteran Executive serving as CEO and Chief Operating Officer for many of Wellpoint’s Health related companies.