It's Working: Nation's Largest Insurer Pulling Out of Obamacare in Nation's Largest State

Posted: Jun 01, 2016 2:35 PM

At the onset of 2016, a number of health insurers began sounding the alarm about Obamacare's financial sustainability and worrisome enrollment trends.  In early April, America's largest insurer announced its withdrawal from a handful of state exchanges created under the law.  Several weeks later, UnitedHealth dropped a bigger bomb on the unpopular program, unveiling its plan to exit a large majority of state-level marketplaces in 2017.  Obamacare defenders spun the major development as insignificant, but their efforts were weak -- especially in the midst of sharply rising premiumsswelling out-of-pocket costs, reduced enrollment data, and nonpartisan projections that the nation's uninsured rate will actually increase over the next decade.  One glimmer of good news buried within UnitedHealth's portentous maneuvering was the company's apparent decision to remain a player in Covered California, Obamacare's largest state exchange.  Consider that glimmer extinguished:

UnitedHealth Group is leaving California's insurance exchange at the end of this year, state officials confirmed Tuesday. The nation's largest health insurer announced in April it was dropping out of all but a handful of 34 health insurance marketplaces it participated in. But the company had not discussed its plans in California. UnitedHealth's pullout also affects individual policies sold outside the Covered California exchange, which will remain in effect until the end of December. "United is pulling out of California's individual market including Covered California in 2017," said Amy Palmer, a spokeswoman for the state exchange...In April, UnitedHealth's Chief Executive Stephen Hemsley said the company was unwilling to keep losing money on the exchange business overall. "The smaller overall market size and shorter term, higher-risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustained basis," Hemsley said in a conference call with investors...

That CNN Money story goes on to note that UnitedHealth wasn't a major factor in California's marketplace thanks to state-imposed limitations, which were triggered by the company's decision not to join Covered California in 2014 or 2015. But after just one year on the scene, the health insurance giant has seen enough -- drawing attacks from Obamacare officials, who blame the insurer's business practices for their losses, as opposed to their failing law. This impotent blame-storming is belied by the ugly nationwide numbers and anticipated losses driven by risk pools that skew older and sicker (and therefore more expensive) than expected. The nation's insurers may have sustained even heavier losses if not for the Obama administration's payment of billions in subsidies using funds not approved by Congress. The New York Times reports this week about the ongoing fight about those hotly-disputed payments, over which Republicans have successfully sued the White House. Secrecy and lawlessness:

On Jan. 13, 2014, a team of Internal Revenue Service financial managers piled into government vans and headed to the Old Executive Office Building for what would turn out to be a very unusual meeting. Upon arrival, the I.R.S. officials, some of whom had expressed doubts that the Obama administration had the proper authority to spend billions of dollars on a crucial element of its health care law, were ushered into a conference room. There, they were presented with an Office of Management and Budget memo laying out the administration’s justification for spending $3.9 billion on consumer health insurance subsidies...The clandestine nature of the session underscores the intense conflict over the spending, which is the subject of a federal lawsuit in which House Republicans have so far prevailed, as well as a continuing investigation by the Ways and Means and the Energy and Commerce Committees. It also shows that more than six years after President Obama signed the Affordable Care Act into law, Republican opposition has not waned. After failing to win congressional approval for the funds, the Obama administration spent the money anyway and has now distributed about $7 billion to insurance companies to offset out-of-pocket costs for eligible consumers. The administration asserts that the health care legislation provided permanent, continuing authority to do so, and that no further appropriation was necessary.

Republican opposition has not waned, nor has public opposition.  But even as Obamacare remains enduringly unpopular, conservative critics of the law must prepare for the Left's inevitable push for increased government intervention as the "solution," to which many Americans -- including the presumptive Republican presidential nominee -- appear to be open.  The Times quotes a former IRS official who describes that private 2014 meeting as quite unusual, and who has since testified that he raised serious doubts about the administration's authority to approve the expenditures in question. He was overruled:

Committee Republicans say Mr. Fisher’s sworn testimony, compelled by a rare Ways and Means Committee subpoena, affirms what they thought all along: that the Obama administration knew it did not have the authority to spend the money and did so regardless to strengthen the health care law in defiance of the Constitution. They say the administration violated a fundamental principle of American government: Congress must appropriate any money spent by the executive branch. “Our investigation is revealing,” said Representative Kevin Brady, the Texas Republican who leads the Ways and Means Committee. “The more we learn, the more it’s clear that high-level administration officials knowingly circumvented Congress and undermined the Constitution.”

Before you go, be sure to read Cortney's post on the Department of Health and Human Services' response to a Congressional subpoena pertaining to the funding of another Obamacare provision. And lest you forget, Obamacare is Hillarycare -- and she insists the law is working, despite having no good answers for real people being actively harmed by it (who consistently outnumber its beneficiaries by a double-digit margin):

Republicans would be wise to get her to defend the law as "working," on camera, as often as possible between now and the fall. Finalized new premium hikes will be announced just days before the election.

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