Surprising absolutely no one, the Obamacare debacle continues to unveil itself. And just like any dead-end big government initiative this one has no end in sight. Insurers in my home republic of Maryland are requesting premium hikes in the range of 18% to 91% for coverage sold through the ACA. The average is roughly around 30%. Virginia insurers have requested premium hikes of up to 64%.
The culprit, some experts are claiming, is that the repeal of the individual mandate has caused healthier people to drop their coverage and in turn decreased positive cash flow into the marketplace. While true to an extent, premiums already increased drastically—doubled—since Obamacare’s inception. Why? Mandated coverage for pre-existing conditions. Sicker people are guaranteed coverage that is disproportionate to the amount of money they pay, if any.
The problem is only going to get worse.
If you dig down into the numbers the top line 91% increase in premiums is for PPO plans. Who uses PPOs? Sick people. They’re also receiving a large amount of subsidies to offset the costs. Healthy people usually purchase HMOs. Since there are no healthy/younger people to offset the costs in the PPO crowd guess what happens? Yep, substantial premium increases for PPOs while less aggressive increases for HMOs. Does it matter to the sick people? Not when they’re receiving taxpayer subsidies.
The increased costs of PPOs also make it unaffordable for middle-income healthy people to even entertain the idea of purchasing a PPO, which tend to have better quality plans. Then there’s also the fact that these insurers are weakening their own products/coverage in a race to the bottom. Wonderful, really wonderful work by the government.
But how long will insurers remain in the PPO market? Is it only a matter of time until insurers do away with PPOs, which then will dump the sick people into the HMO crowd? What happens then? We will see substantial increases for healthy people who do not receive government subsidies while those with pre-existing conditions will continue to receive coverage with no financial repercussions. Healthy people won’t purchase health insurance because it’s not unaffordable. The death spirals continue.
I know it is some people’s inclination to blame health insurance companies. Yes, they are part of the problem. Or maybe it’s politicians who receive large chunk of campaign donations from the industry.
The law should have been repealed. There’s no doubt about it. There are better ways to deal with this debacle.