Double Digits Increases In Obamacare Insurance Rates Proposed
Stanley Feld M.D.,FACP,MACE
Thirty-seven states refused to setup Obamacare State Health Insurance Exchanges. Thirty-seven states refused because of the expected cost burden to those states and citizens. States are required to balance their state budgets. Most states have deficits and do not have balanced budgets. Obamacare’s requirements would simply add to their budget deficits. States would be forced increase state taxes.
The 37 states felt that the Obamacare State Health Insurance Exchanges were an attempt, by President Obama, to decrease the federal cost burden and shift it to the states.
It was also a states’ rights issue.
None of those states felt that Obamacare State Health Insurance Exchanges could work and not become an increased cost burden.
The Supreme Court ruled in 2012 that states have the right under the constitution to refuse to create a State Health Insurance Exchange.
In June 2015 the Supreme Court will rule on King vs. Burwell.
Can the Federal Health Insurance Exchanges subsidize applicants the same way State Health Insurance Exchanges can subsidize applicants.
The law’s language is specific. The Obamacare law specifically states that only the State Insurance Exchanges can subsidies applicants.
The Obama administration media manipulation machine is already spinning the truth in case the Supreme Court rules against the federal government.
Eight million people will lose their subsidy. There are 330 million people in America. There are as many people uninsured in 2015 as there were before the law was enacted. In five years we are no closer to the promise that Obamacare would provide universal care.
Obamacare is failing because it is a bad law in many respects.
The essence of the Obama administration’s spin is that if the Supreme Court rules against the government the cost of insurance will escalate to unaffordable levels for Federal Health Insurance Exchange purchasers.
Subsidies that made insurance plans affordable face a crucial test with decision expected in June.
The truth is the cost of healthcare premiums are going to skyrocket for Obamacare applicants because the only people who signed up have pre-existing illnesses and had to buy insurance or the very poor because their insurance was fully subsidized.
The adverse selection and the financial accounting rules for the healthcare insurance industry allow them to raise the premiums.
President Obama’s subsidies for Obamacare premiums expire in 2016.
Megan McCardle writing in Bloomberg says;
“Insurance companies have been bullied by the Obama administration into keeping rates as low as they are, even though they can't make any money.
For sheer survival, most companies will begin to charge enough so they at least don't lose any money, or leave the exchanges altogether.
For those of you who have followed my blog carefully, you know President Obama has provided the healthcare insurance industry a subsidy in order to get them to participate. It guarantees that it cannot lose more than 2% of its expected profit.
The insurance industry determines its expected profit.
The insurance company subsidy is about to expire. The guarantee in Obamacare, of not losing any money, is going to evaporate. In addition, only the sickest and poorest people have obtained insurance from the federal and state health insurance exchanges. The federal and state exchanges have lost a great deal of money.
These losses are slowly being revealed.
The State Health Insurance Exchanges are starting to publish their losses at the same time the healthcare insurance industry is reporting their potential losses for next year. Those potential losses are reflected in the proposed premium increases.
Moda of Oregon says that its claims were 139 percent of revenue.
CareFirst of Maryland says claims were 120 percent of revenue.
Tennessee told the Wall Street Journal it lost $141 million on exchange plans last year.
State of New Mexico says it lost $23 million on revenue of $121 million.
The states that signed up for the State Health Insurance Exchanges are losing money. Maybe the states that did not sign up were right. It would be a financial burden on those states.
The clause in the law permits only those states having a health insurance exchange to provide subsidies to their applicants. It excludes all others, including the federal government.
The only question the Supreme Court has to consider is, can the federal health insurance exchanges provide subsidies to applicants according to the law as written?
The law was written to encourage states to create health insurance exchanges. It did not include the provision of subsidy to applicants for federal health insurance exchanges.
If the federal exchange would be permitted to provide subsidies, the law should be amended by congress.
A Republican congress would have to amend the law.
Obamacare is an apparent disaster to consumers, insurance providers, hospitals and physicians.
The majority of Republican are calling for Obamacare’s repeal.
It is unlikely that a Republican congress will change that provision in the law.
The “States only provision” in the law has backfired on President Obama and those states creating health insurance exchanges.
The cost of setting up and administering this new bureaucracy was enormous. The healthcare insurance offered by Federal and State Health Insurance Exchanges were either too expensive for healthy or young consumers or had too many unnecessary benefits for those consumers.
The only consumers who signed up were people who were too sick to be able to buy private insurance or too poor to be able to buy insurance without being subsidized.
Those consumers comprise 85% of the applicants. The result has been an adverse selection pool.
If the Supreme Court rules against President Obama he is going to say that private insurance does not work. The federal government must create an entitlement to everyone.
The result will be socialized medicine with the federal government being the single party payer controlling rationing of care, access to care and the cost of care to consumers.
I believe it will make healthcare coverage even worse than it is now.
Why no one is considering my concept of consumer driven healthcare with my ideal medical saving account is beyond me.
Rather than making consumers actively responsible for their health, healthcare dollars and healthcare, we are on the road to making them passive recipients of their healthcare.
America is going to be further down the Road to Serfdom.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.
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