April 26, 2016
A large subsidy program that has helped insurers offering Affordable Care Act (ACA) compliant coverage in the individual market expires this year. In 2017, for the first time, insurance premiums alone must cover expenses in the individual market. A new working paper released today by the Mercatus Center at George Mason University measures the importance of this subsidy program, sheds new light on insurers’ generally poor results in 2014, and discusses what likely lies ahead for the law.
The study, authored by myself, Doug Badger of the Galen Institute and Ed Haislmaier of the Heritage Foundation contains two key findings. First, insurers incurred substantial losses overall despite receiving much larger back-end subsidies per enrollee through the ACA’s reinsurance program than they expected when they set their premiums for 2014. Second, we estimate that in the absence of the reinsurance program insurers would have had to set premiums 26% higher, on average, in order to avoid losses—assuming implausibly that the overall health of the risk pool would not have worsened as a result of the higher premiums. Our findings raise serious questions about the ACA’s future, particularly when the reinsurance program ends and premium revenue must be sufficient to cover expenses.
Source: New ACA Study Considers What Happens When Generous Government Subsidies End | Mercatus
April 19, 2016
UnitedHealth is withdrawing from most of the 34 ObamaCare Exchanges in which it currently sells, citing losses of $650 million in 2016. A recent Kaiser Family Foundation report indicates UnitedHealth’s departure will leave consumers on Oklahoma’s Exchange with only one choice of insurance carriers. Were UnitedHealth to exit all 34 states, the share of counties with only one or two carriers on the Exchange would rise from 36 percent to 52 percent, while the share of enrollees with only one or two carriers from which to choose would nearly double from 15 percent to 29 percent.
Source: Five Things ACA Supporters Don’t Want You To Know About UnitedHealth’s Withdrawal From ObamaCare – Forbes
February 19, 2016
The Department of Health and Human Services (HHS) announced Friday night that it was in the process of shorting the U.S. Treasury $3.5 billion.
Well, they didn’t exactly announce it. You had to read between the lines.The theft of $3.5 billion will help prop up insurers that have agreed to sell Obamacare policies in the individual market. Behind all the happy talk from Administration officials about the program’s success lies an unpleasant truth: insurers that participate in Obamacare exchanges are bleeding money.
Those losses are coming despite billions of dollars in handouts the government is providing the industry. Some of those handouts are entirely lawful; others, not so much.
Source: HHS $3.5 Billion Heist? | Doug’s Brief Case
February 17, 2016
Private Health Insurance Market Reforms in the Patient Protection and Affordable Care Act (ACA)
Annie L. Mach Analyst in Health Care Financing Bernadette Fernandez Specialist in Health Care Financing February 10, 2016
Full report: http://www.fas.org/sgp/crs/misc/R42069.pdf
February 12, 2016
On February 11, 2016, the Congressional Budget Office (with the Joint Committee on Taxation) released a report on Private Health Insurance Premiums and Federal Policy. The report examines the effects of federal subsidies, fees, and taxes; federal regulations; and actions taken by insurers on health insurance premiums. In particular it considers how the Affordable Care Act (ACA) has affected health insurance premiums. The Congressional Budget Office (CBO) did not conduct any original research on these topics. Rather the report describes what economic theory would predict regarding these effects and the limited empirical work that has been done as to what has happened so far under the ACA.
Source: CBO Releases Report On Private Health Insurance Premiums And Federal Policy
December 5, 2015
Although much of this activity is about scaling — the idea that if you’re not big enough, you have to find someone bigger to merge with — I believe that much of what’s going on now is in response to the Affordable Care Act. The ACA lit the fuse on a trend that might have happened anyway, but was certainly sped along by the government’s push to insure all Americans. In short, we seem to be returning to a monopoly industry, where big companies are buying up smaller ones to achieve efficiencies of scale that not even the state-run nonprofit exchanges can touch.
Source: Getting To The Root Of The Health Care M&A Frenzy | Insurance News Net
November 3, 2015
To date, more than half a million Americans have lost coverage thanks to the failure of these co-ops. The reason? The co-ops took on far too many customers at artificially low premiums, and, as the American Enterprise Institute and the Galen Institute noted earlier this year, are drawing down “unspent loan funds to pay medical claims.”
Despite mounting failures, the Obama administration has been unwilling to change course. Politico Pro has reported that state and federal regulators let some of the co-ops “reclassify certain loans as surplus, a move that financial analysts say will make the health plans’ balance sheets look better and potentially keep them from shutting down.” In other words, to hide their debts and project false solvency—until they, too, go under.
Source: ObamaCare’s Cascading Co-op Failures – WSJ