2017 Obamacare premiums
Posted: Mon May 16, 2016 6:18 am
http://www.msn.com/en-us/money/healthca ... &ocid=iehp
The article explains how some large insurance companies are backing out of most of the states they participate in.
To me, this is sort of like what happened with the lending crisis. Someone made a policy that sounded like it would help ("thou shalt lend to everyone") and the lending industry figured out how to make a profit on something inherently unprofitable (lending to high risk borrowers). The unintended side effect was this mortgage-backed derivative market where pieces of loans were combined with other pieces of loans and no one knew what the hell was going on - which would have been OK I guess if the original loans weren't issued incorrectly in the first place. But they weren't, and to be fair, banks were complicit, often "adjusting" the appraised value of a home to make the loan work. More info: http://useconomy.about.com/b/2008/10/13 ... crisis.htm
But that is tangential to my point: you try to regulate to fix a perceived problem, and like whack-a-mole, something pops up somewhere else. I think this is a perfect example of a liberal policy with the essential spirit of "they are big companies that make a lot of money - they'll figure it out." Well, they're figuring it out - they are backing out of Obamacare. And I'm not necessarily saying all regulation is bad. But is the way we do business really the most efficient? It is not. A Democrat would say "well that was because there wasn't enough regulation!" (unregulated derivatives market) and a Republican would say "there was too much regulation!" (the directive to lend to anyone and everyone, and oh by the way, Fannie Mae will buy the loan from you!).
I would argue that this phenomenon is an artifact of our broken two party system. You end up with policy that appears to appease both sides, and in reality, it's the worst thing you could have done.
The article explains how some large insurance companies are backing out of most of the states they participate in.
And in case you think there isn't enough regulation, the rate increases that will be proposed by the remaining insurance companies have to be validated by the Office of the Insurance Commissioner.Higher member utilization rates and the ease with which consumers can change health plans are set to cause UnitedHealth to lose around $500 million on its Obamacare individual marketplace plans in 2016. Mind you, we're talking about the largest U.S. health insurer -- a company that's versed in how to sustain profitability -- waving the white flag in most states.
And it's not just UnitedHealth. Humana has also threatened to pack up shop due to losses suffered on Obamacare exchanges. Also, more than half of all of Obamacare's approved healthcare cooperatives closed up shop heading into 2016 due to unsustainable losses and an insufficiently funded risk corridor, which was designed to protect money-losing insurers by taking money from insurers that were raking in the dough hand over fist.
With competition likely decreasing rather than increasing on Obamacare's marketplace exchanges, and insurers clearly in need of higher premium pricing in order to make a sustainable profit, the fear all along has been that premium prices in 2017 were going to go way up.
To me, this is sort of like what happened with the lending crisis. Someone made a policy that sounded like it would help ("thou shalt lend to everyone") and the lending industry figured out how to make a profit on something inherently unprofitable (lending to high risk borrowers). The unintended side effect was this mortgage-backed derivative market where pieces of loans were combined with other pieces of loans and no one knew what the hell was going on - which would have been OK I guess if the original loans weren't issued incorrectly in the first place. But they weren't, and to be fair, banks were complicit, often "adjusting" the appraised value of a home to make the loan work. More info: http://useconomy.about.com/b/2008/10/13 ... crisis.htm
But that is tangential to my point: you try to regulate to fix a perceived problem, and like whack-a-mole, something pops up somewhere else. I think this is a perfect example of a liberal policy with the essential spirit of "they are big companies that make a lot of money - they'll figure it out." Well, they're figuring it out - they are backing out of Obamacare. And I'm not necessarily saying all regulation is bad. But is the way we do business really the most efficient? It is not. A Democrat would say "well that was because there wasn't enough regulation!" (unregulated derivatives market) and a Republican would say "there was too much regulation!" (the directive to lend to anyone and everyone, and oh by the way, Fannie Mae will buy the loan from you!).
I would argue that this phenomenon is an artifact of our broken two party system. You end up with policy that appears to appease both sides, and in reality, it's the worst thing you could have done.