Obamacare Architect: Okay Fine, Our Law Isn't Controlling Costs
You remember Dr. Ezekiel Emanuel, don't you? He's the brother of Rahm, who played an instrumental role in crafting and promoting Obamacare -- and who occasionally
With the open enrollment deadline for Obamacare looming next month, one of the chief architects of the president's health law said Friday the plans offered on government-run exchanges need to be more affordable in order to boost participation rates. High-deductible plans are part of the problem, Dr. Ezekiel Emanuel added..."Even though I am a liberal, I think we really have to focus on cost control. Affordability is absolutely critical across the board, because if we don't have affordable plans we are not going to get universal coverage. They are intimately linked," said Emanuel...He did acknowledge: "We've overplayed the high-deductible plans. People are feeling this is less and less insurance. And just more and more, 'I'm paying out of my pocket.'"
With rates rising substantially across most of the country, consumers are also
UnitedHealth Group, the largest insurance company in the U.S., on Thursday slashed its earnings outlook, citing new problems related to Obamacare, and told investors it may exit the program's exchanges. "In recent weeks, growth expectations for individual exchange participation have tempered industrywide, co-operatives have failed, and market data has signaled higher risks and more difficulties while our own claims experience has deteriorated," Stephen J. Hemsley, chief executive officer of UnitedHealth Group, said in a press release. The release added that, "UnitedHealthcare has pulled back on its marketing efforts for individual exchange products in 2016. The company is evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017."
In that single compact quote, Hemsley makes several key points. He notes that new enrollment projections have been slashed, that a slew of state-level Obamacare co-ops have gone belly up, and that the adverse selection problem arising from older, sicker risk pools is real. Klein goes on:
In a conference call with investors, Hemsley offered a sober assessment of the exchanges' future viability. He said that claims data have been getting worse as time has gone on, and there's no evidence pointing toward improvement. Asked about whether the company could sustain losses past 2016, he was blunt: "No. We cannot sustain these losses. We can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself." The year 2017 is significant for insurers, because that's the year when several programs designed to mitigate risk for insurers through federal backstops go away. The hope was that those programs would act as training wheels for Obamacare in its first few years of implementation, but after that, the insurers were supposed to be able to thrive on their own. UnitedHealth's statement suggests otherwise. If UnitedHealth and other insurers decide to exit, remaining insurers will be forced to take on even more high-risk enrollees, prompting them to either raise rates further or exit themselves.
That's exactly how a market "death spiral" would begin. As for the impending expiration of Obamacare's bailout-style loss mitigation provisions Klein addresses, those programs are already falling short of expectations. Congressional Republicans deserve real credit on this front, as Jeffrey Anderson explains at the Weekly Standard, singling out Marco Rubio and Mike Lee for their special efforts: "One of the least-reported substantial policy victories in recent years was stopping Obamacare’s insurer bailout through last fall’s CRomnibus bill. Now we can attach a price-tag to that victory: $2.5 billion. That’s how much taxpayers would have been funneling to President Obama’s insurance-company allies if the bailout hadn’t been thwarted, according to Obama administration officials. Insurers were hoping for $2.87 billion but, thanks to the anti-bailout legislation, which required Obamacare’s risk-corridor program to operate in a revenue-neutral manner, rather than as a bailout, they will be getting only $362 million—the same amount that other insurers paid in," Anderson writes. "But this victory was worth more than just that, for when companies can’t rely on having large chunks of their losses covered by taxpayers, they have to price their products accordingly. Thus, insurers have had to price their Obamacare-compliant policies more honestly, causing premiums to rise and enrollment to slow." Rubio is pushing for