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It's Working: Blue Cross Exits Obamacare Market, GOP Rolls Out Replacement Proposal

When the nation's largest insurer announced its departure from a few Obamacare state exchanges last year, the law's defenders pooh-poohed the development as a blip on the radar. Then the health insurance giant pulled out of almost all markets, forcing apologists to insist that all was well because UnitedHealth's overall Obamacare marketshare was relatively small. Next, the company said it was closing up shop within Covered California, the massive exchange in America's largest state. And now we get word that another enormous insurer is edging away from participation in the law -- withdrawing not just from Minnesota's Obamacare exchange, but from the state's entire individual-based market:


Many Minnesotans will once again feel the sting of President Obama's dishonest "keep your plan" pledge, as the predictable consequences of his signature "accomplishment" are driving offerings out of existence:

Minnesota's largest health insurer, Blue Cross and Blue Shield of Minnesota has decided to stop selling health plans to individuals and families in Minnesota starting next year. The insurer explained extraordinary financial losses drove the decision. "Based on current medical claim trends, Blue Cross is projecting a total loss of more than $500 million in the individual [health plan] segment over three years," BCBSM said in a statement. The Blues reported a loss of $265 million on insurance operations from individual market plans in 2015. The insurer said claims for medical care far exceeded premium revenue for those plans. "The individual market remains in transition and we look forward to working toward a more stable path with policy leaders here in Minnesota and at the national level," the company stated. "Shifts and changes in health plan participation and market segments have contributed to a volatile individual market, where costs and prices have been escalating at unprecedented levels." The decision will have far-reaching implications. Blue Cross and Blue Shield says the change will affect about, "103,000 Minnesotans [who] have purchased Blue Cross coverage on their own, through an agent or broker, or on MNsure."

Risk pools have been sicker and older than expected, driving up expenses for insurers and resulting in losses.  A major Blue Cross Blue Shield study released this year determined that the cost of insuring new Obamacare enrollees is 22 percent higher than it is for consumers in the employer-based market. This law is failing across the board: On spiraling premiums, on out-of-pocket costs, on enrollment figures, on economic impact, and on cost curves.  It's hurting real, hardworking people and harming more Americans than it's helping, which is why it remains unpopular with voters.  Hillary Clinton, who effectively designed the scheme, believes it's working.  Republicans do not, which is why they've voted to repeal Obamacare on numerous occasions (with some successes), finally getting a full repeal bill to the president's desk this year.  Even though various individual members and coalitions have put forward specific and detailed replacement plans, one of the fair knocks on the GOP is that they've never offered a unified Obamacare alternative proposal.  That changed this week, as House Speaker Paul Ryan unveiled a 20,000-word plan that repeals virtually all of the law, while maintaining popular provisions like the '26-year-old' rule, and working to ensure that people with pre-existing conditions are able to obtain coverage.  Ramesh Ponnuru analyzes the particulars and writes that if Republicans eventually find themselves in a position to legislatively implement the plan, Obamacare will have set the table for its own replacement:


In the past Republicans have argued about how to reform tax policy on health care: Should employer-provided coverage remain untaxed, or should this tax break end? Should people without access to such coverage get a tax credit or a tax deduction? The House plan lets the tax break stay -- avoiding the political disaster that a less compromising free-market plan would have courted -- but trims it for the most expensive plans. And it offers those without employer coverage a tax credit. Republicans would not have resolved the issue that way without Obamacare. Offering a tax credit, instead of a deduction, would enable many more low-income people to buy coverage, but by the same token it eats up more of the budget. In the aftermath of Obamacare, though, Republicans realize that they need to minimize the number of people who lose coverage under a replacement.

A thorny issue for any health-care plan other than single-payer is how to handle people with pre-existing conditions. Obamacare’s approach is to prohibit insurers from considering these conditions. But that prohibition means people can wait until they get sick to buy insurance, threatening the viability of insurance markets. The Affordable Care Act attempted to solve that problem by requiring healthy people to buy insurance. The Republicans take a different approach. They too would keep insurers from discriminating against people with pre-existing conditions -- so long as those people had maintained continuous coverage. That regulation creates the opposite incentive from Obamacare’s total prohibition: Healthy people have a reason to buy insurance, so no further action needs to be taken to get them to do it...People who had not maintained continuous coverage, who do not have an employer plan and who cannot buy private coverage would be covered by subsidized high-risk pools.


Ponnuru concludes: "These ideas have no immediate prospect of becoming law. They look about as unlikely to carry the day as the ideas behind Obamacare did six years before it was enacted. The House plan makes it much more likely, though, that Republicans will be ready to act should they ever attain unified control of the government. And if that day comes, Obamacare will have paved the way for its own replacement."  Here's Ryan laying out broad strokes at AEI, followed by a panel discussion among the four committee chairmen who crafted the new blueprint:

The Speaker made reference to the essential importance Medicare reform in his remarks, which he has championed for years. I'll leave you with a reminder of why that challenge is so pressing. In short, if we do nothing, "Medicare as we know it" is on a rapid path to insolvency -- as entitlement spending remains by far the largest driver of our long-term debt crisis:

The nonpartisan Congressional Budget Office estimates Medicare's insolvency date will arrive two years earlier, in 2026.

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