Friday, November 20, 2015

A big tree totters in the Obamacare forest

Things aren't going well for Obamacare, nor for the companies who are part of it. And now the biggest one of all is making noises:
The biggest U.S. health insurer said it has suffered major losses on policies sold on the Affordable Care Act’s exchanges and will consider withdrawing from them, adding to worries about the future of the marketplaces at the heart of the Obama administration’s signature health law.

The disclosure by UnitedHealth Group Inc., which had just last month sounded optimistic notes about the segment’s prospects, is the latest sign that many insurers are finding the new business unprofitable, despite an influx of customers that has helped swell revenues.
It's big news if UHG is thinking about getting out, but the key player to watch is Blue Cross/Blue Shield. UHG's primary business involves group plans for employers and while they are a significant player in the market, BC/BS is much more important. Having said that, these comments should cause you to raise your eyebrows:
UnitedHealth Group Chief Executive Stephen J. Hemsley said the company isn’t willing to continue its losses into 2017. UnitedHealth has already locked in its exchange offerings for 2016, but it is pulling back on marketing them during the current open-enrollment period to limit membership, which it said last month totaled around 550,000.

The company will make market-by-market determinations in the first half of next year about whether it will continue selling products on the exchanges.

“We can’t sustain these losses,” he said. “We can’t subsidize a market that doesn’t appear at this point to be sustaining itself.”
And the reason it's not sustaining itself? Don't tell me, lemme guess:
Mr. Hemsley emphasized problems with consumers “coming in and out of the exchange system to use medical services,” or essentially signing up for health plans when they need to cover health expenses—an issue also highlighted by other insurers.
If it's possible to game the system, people will do it. And why wouldn't they? The law makes it possible, which is why, for some people, it makes more sense to pay the individual mandate fine and sign up for insurance only when you need it. Heckuva plan, folks.

2 comments:

Bike Bubba said...

Come on, don't be so judgmental--it's not like anyone warned that eliminating pre-existing conditions clauses was likely to cause this. Except, of course, for any competent actuary, or anyone who halfway understands logic.

W.B. Picklesworth said...

Frankly I'm stunned. I thought this was totally going to work.