We have some recent news about that Patently Puerile, Asinine Current Administration concept current Administration initiative called the Patient Protection and Affordable Care Act (PPACA) – AKA ObamaCare. And, as usual, the news isn’t all that good.
A few weeks ago, news articles surfaced saying that insurance carriers were worried about ObamaCare. Specifically, they began warning the public that losses sustained by policies issued through state exchanges were unsustainable.
Well, yesterday the other shoe fell. UnitedHealth – the nation’s largest provider of health insurance – has announced it will pull out of most state ObamaCare exchanges next year.
Why? Simple. They want to stay in business. UnitedHealth estimates their losses due to policies issued through ObamaCare exchanges over the last two years at approximately $1 billion.
Gee, who’d a thunk it? I mean, insurance is only based on the market model that the insurer sells many policies, but pays out a comparatively small number of claims. Specifically, over the long term an insurer must take in more in income than they pay out in claims and other expenses to stay in business. Otherwise, over the long term they go belly-up.
That’s a major reason why health insurance companies typically have an exclusionary period for preexisting conditions. It’s also why truly bad drivers end up in the “shared risk” insurance pool in most states – and then pay through the nose for their auto insurance. Both practices are designed to bring revenues above expected claims payouts; and both practices are supported by hard statistical data.
ObamaCare’s prohibition on the exclusion of preexisting conditions radically changes the financial basis for ObamaCare insurance policies – it’s raised the amount paid out in claims hugely. This means there are two options an ObamaCare insurance provider has if they want to stay in business: raise premiums dramatically, or cease participation. United Health has just begun the process of doing the latter.
But wait – ObamaCare has made insurance cheaper, right?
Yeah, right. Now, tell me another shaggy dog story – this time one that’s funny.
It turns out that both patient medical costs and health insurance premiums are rising under Obamacare. Given basic economics, that was also eminently predictable. A recent study by Blue Cross/Blue Shield found that on average ObamaCare policy holders are sicker and require more medical care, at larger cost, than people who obtain health insurance through their employers. Wanna guess where the money for those extra costs comes from?
If you guessed “increased premiums”, give yourself a gold star. Well, that plus subsidies – which are paid out of your taxes.
Gee. What a surprise.
Bottom line: ObamaCare is based on flawed economic analysis, bad assumptions, and with wishful thinking. It’s the equivalent of King Canute ordering the tide not to rise.
However, there is a major difference. King Canute didn’t expect the tide to obey him; he was making a point to his courtiers concerning the limits of his authority. The imbeciles that brought us ObamaCare actually expected basic economics to change on command.