Of all the legislative “achievements” that President Barack Obama claims to be proud of, one stands out for its sheer scale, expense and impact on ordinary Americans: the Affordable Care Act (ACA), otherwise known as Obamacare.
For all the hype about Obamacare when it was first launched with a non-functioning website (Healthcare.gov) that infamously cost $5 billion to create, its premiums have soared in the six years since it was enacted.
While Obama claimed that citizens covered by Obamacare would see their health insurance costs decrease by as much as $2,500 per family, large numbers of people have actually seen their insurance premiums rise, by as much as 58 percent.
For all the talk about how Obamacare was going to democratize health care and bring health insurance costs in line with those of other Western nations, the program has not had a positive impact on the majority of Americans, a Heritage Foundation survey has found.
In fact, in recent days, the news has been all bad for Democrats and other supporters of the health care act, leading some observers such as Senator John McCain of Arizona to wonder not if but when Obamacare will be declared Dead On Arrival.
“It’s clear that Obamacare is unraveling and at a rapid rate,” said the senator on CNN’s “The Lead.” “We’re going to have to go back to square one. We’re going to have to go back and not only repeal, but replace [it].”
In particular, potential double-digit Obamacare cost increases in six crucial November election swing states have this issue looking like a powerful referendum on whether voters will support Obamacare (and pre-Obamacare effort) cheerleader Hillary Clinton, who has pledged to support and continue the Obama administration program, even if it means raising taxes to help pay for it.
Some commentators have speculated that Clinton would try to pass those tax increases off under the guise of improving American infrastructure or bolstering Social Security. In reality, however, they would amount to an insurance industry bailout in the face of crippling losses.
Enrollee premium increases have been proposed by insurers in Ohio (10 percent), Illinois (at least 20 percent), Pennsylvania (23.6 percent) and North Carolina (18 percent). Furthermore, insurers have also asked for increases of 26 percent in Portland, Oregon, 16 percent in New York City and 21 percent in the District of Columbia.
According to the nonprofit Kaiser Family Foundation, low-cost plans in Obamacare face hikes of 11 percent on average. Even with these proposed premium spikes, 2017 prices are expected to rise even further.
While residents of these locales may be facing higher premiums, insurance companies such as Aetna, Humana and UnitedHealthcare are pulling out of many states and reducing coverage in others. Aetna announced a $300 million loss, causing it to withdraw from Obamacare exchanges in 11 states and remain in only four.
Company CEO Mark Bertolini explained, “People need these procedures, and they need these drugs, and they need to be covered. But when you couple that with a risk-adjustment mechanism for high-risk people that really is limited by virtue of the legislation, it causes everyone in the system to lose money.”
“The consequence of [Aetna’s] exit would be felt particularly hard in Arizona, where residents of Maricopa County would be left with just two health insurance options – down from eight plans offered in 2016. The crumbling of Obamacare at this alarming rate is simply unsustainable,” said Senator McCain.
Humana announced losses of $1 billion and plans to exit exchanges in all but 11 states. The company said it still faces “persistent risk selection challenges.”
Last November, UnitedHealthcare President and CFO Dave Wichmann said that “[For 2016], we put in strong price increases. Average increases across the country are in the double-digits.” Company CEO Stephen J. Helmsley said, “Growth expectations for individual [Obamacare] exchange participation have tempered industrywide, co-operatives have failed, and market data has signaled higher risks and more difficulties while our own claims experience has deteriorated.”
The company increased its premium prices an average of 20.3 percent, but this still did not prevent 2016 losses of $600 million due to Obamacare, and the firm said it may end its participation in the program entirely by 2017.
In California, the insurer Blue Shield will shut down for several days after Labor Day to stem Obamacare losses. The company hopes to save $4 million from the move.
Spokesman Steve Shivinsky stated, “This is certainly not normal for us. We’re definitely seeing some income challenges as of mid-year… Health plans nationally are facing challenges in the individual market and on the Obamacare exchanges, and some have said they plan to… cut back their participation [or exit altogether].” Blue Shield has plans to raise rates and cut jobs to remain solvent.
Analysts have claimed insurers lost a combined $2.5 billion on Obamacare in 2014. Out of 23 Obamacare insurance cooperatives established at the beginning of the program, only seven remain, and even those appear to be on shaky ground.
Some industry observers are predicting future mergers of insurance companies that are still in the program. Aetna already attempted to merge with Humana, only to have their plans thwarted by the anti-monopoly actions of President Obama’s Justice Department.
Several pundits have whispered that the Democrats’ ultimate goal is to have all the insurers merge with the federal government, forming a socialist single-payer system.
Despite the above news, the Obama administration claims that Obamacare is not in trouble. “Aetna’s decision to alter its Marketplace participation does not change the fundamental fact that the Health Insurance Marketplace will continue to bring quality coverage to millions of Americans next year and every year after that,” declared Kevin Counihan, the CEO of Obamacare marketplace Healthcare.gov.
At the same time, the Obama administration has quietly cut its projected enrollment figures for Obamacare by 25 to 30 percent in order to claim enrollment is surpassing its expectations.
However, evidence has emerged that instead of younger people entering the program who were expected to pay for the costs of sicker enrollees in Obamacare, the program has drawn more people in the latter category, creating higher expenses for the insurance companies.
In the industry, this is known as a “death spiral,” because increasing prices discourage healthy people from signing up, and the effect is recursive. Many of the new patients are on Medicaid, which for insurance companies is almost the same as their being uninsured.
Meanwhile, The New York Times has said that high deductibles make Obamacare “all but useless” for people who were previously uninsured. This is because, for most people, the costs of health care under Obamacare are now greater than what their costs were when they had no insurance at all.
The median deductible for Obamacare is $5,000, meaning that the program pays nothing unless care costs exceed that amount. This means that effectively, Obamacare only provides protection against catastrophic illness or injury, which is relatively rare.
The Times article quotes several buyers of coverage under Obamacare who claim to not use their insurance because of this reason. A good number of potential enrollees in the program under age 35 have chosen to pay the penalty for not enrolling because it’s cheaper than the cost of coverage that they don’t need. Many wait until they get sick to enter the program.
Republican presidential candidate Donald Trump has vowed to repeal Obamacare and replace it with a new plan. Increasingly, the program is becoming a campaign issue. The Kaiser Family Foundation’s Larry Levitt agreed, stating, “Any reports of premium increases will immediately become talking points on the campaign trail. We’re in an election where the very future of the law will be debated.”
