Let us spell it out. the Insurance industry model is in a death spiral. The only model that can ever work is a mandatory insurance system in which all must be insured. That alone allows the numbers to remain stable.
After that the question is how to provide internal competition that avoids beggar thy neighbor tactics by participants. Yet that is exactly what insurance companies do and will not give up as they see no other way than jacking prices and dumping problems onto someone else.
My point is that once it becomes mandatory, we do not need the insurance company solution. but we do need internal competition in order to drive prices down. In Canada that has come about by using monopoly buying to the provinces and allowing some competition that way. In short it can be done but take thought.
Obamacare Will Soon Be Zombiecare
May 16, 2017
By Patrick Watson
Obamacare probably doesn’t affect you directly.
Most Americans get their health insurance from either their employer or Medicare.
If you are a healthcare provider, your job likely existed before Obamacare and will still be there long after.
If your income is below $200,000 a year, the healthcare surtax doesn’t add to your tax bill.
Saying Obamacare doesn’t affect you directly is not the same as saying it doesn’t affect you at all. It certainly does.
You and I are part of the economy, and so is healthcare. We are all roped together.
That’s actually a good thing because we’re going to need each other next year when Obamacare changes into something else.
It’s not going to die… but it won’t be quite alive either. It will be somewhere between alive and dead.
That’s right. In 2018, Obamacare may become Zombiecare.
The Clock Is Ticking
Before the election six months ago, few people would have predicted today’s healthcare standoff.
Clinton supporters expected Obamacare would continue with some minor adjustments. Those behind Trump assumed Republicans would quickly repeal and replace Obamacare, as repeatedly promised.
Instead, the GOP House (barely) passed a replacement plan that the GOP Senate has little interest in pursuing. Negotiations continue, so we’ll see.
Unfortunately, time is not on their side. Obamacare is in deep trouble now.
As I explained back in March, the insurance companies haven’t been able to run profitably because not enough young and healthy people are buying Obamacare policies. That’s made them raise rates, which drives away more people and ultimately creates a vicious cycle.
Let us spell it out. the Insurance industry model is in a death spiral.
Insurers have no incentive to stick around and lose money—and they must decide by June 21 whether to stay in the Obamacare exchanges for 2018. In some states, filing deadlines are even sooner.
Photo: Nick Youngson
Yet the Senate seems in no hurry to act. The odds that they will hash out a bill and get the House and the president to agree in the next five weeks are pretty low.
Moreover, they can’t just extend the deadline. Insurers need months to reprogram systems, train staff, and build provider networks. Congress can’t dawdle into summer and then unveil something entirely new. If they do, the 2018 rollout will be a catastrophe.
So insurers are doing the rational thing. They’re either backing out or raising rates to compensate for all the unknown risks they will be taking.
Early signs are ugly:
Maryland’s top insurer, CareFirst Blue Cross, has requested an average 50% rate increase for 2018.
In Virginia, Anthem Blue Cross is asking for 37.7% higher rates.
Aetna said it will be pulling out of all Obamacare exchanges nationwide.
Iowa is down to only one carrier, Medica, which only covers a few counties.
We’ll see more such stories in the coming months. Barring some legislative miracle, the result will be an individual health insurance market with sky-high rates and deductibles—if your area has any insurers at all. Many won’t.
But there’s a twist to this, one few people are noticing. I learned it from healthcare policy expert Robert Laszewski, whom I’ve quoted before.
He says Obamacare won’t explode or collapse, even if Congress does nothing. That’s because most of the beneficiaries will still be heavily subsidized under current law. They won’t care what the price is.
Here’s how Laszewski explains it.
The health insurance companies' defensive strategy is simple: Limit the plan offerings available to ones that bring in the most premium and then drive the rates as high as they need to be in order to protect the insurance company's solvency. Health plan executives realize this will push the unsubsidized and partially subsidized people off the rolls but leave a core enrollment of taxpayer subsidized people insulated against the costs and ultimately profitable for the insurers.
Some experts have said that a death spiral by its very nature cannot be stabilized. Under Obamacare, that is not necessarily true. Because of the uniqueness of the program's subsidy system, there is likely a point where a health plan can concentrate its pool of covered people from among the most highly subsidized participants and collect enough premium to end the red ink. That is what these latest big increases are about.
So, health insurance companies are happy to take taxpayer money as long as they don’t have to take most taxpayers as customers. They only want price-insensitive poor people. But in cold, hard business terms, it’s probably their best move.
Bottom line: In 2018 Obamacare will still exist, but only as taxpayer-provided indigent care. The program’s heart and soul—the grand vision of “Affordable Health Care” for every American—will be gone.
What’s left will be a mere shell, stumbling around and consuming resources.
Or, as Laszewski called it, Zombiecare.