Health insurance companies all around the nation are waking up to the realization that the Affordable Care Act is not so affordable for them.
Having lost money on their Obamacare plans, several insurers are talking of raising their premiums next year while others are thinking of dropping out of the Obamacare exchanges altogether.
But premium hikes will not solve the problem because the entire Obamacare system is fundamentally flawed, according to the past president of the Association of American Physicians and Surgeons. For starters, the law has perverted the meaning of health insurance.
"What these people are selling is not real insurance," said Lee Hieb, M.D., an orthopedic surgeon and author of "Surviving the Medical Meltdown: Your Guide to Living Through the Disaster of Obamacare." "They're selling some kind of hybrid, bastardized, prepaid health care, which always, every time it's ever been tried, fails."
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Real insurance, according to Hieb, is based on actuarial analysis. An actuary looks at relevant statistics and calculates an individual's risk of contracting certain maladies, and the insurance is priced based on a person's risk – it costs more for higher-risk individuals. And Hieb insisted true insurance is only meant to cover things too expensive for most people to afford on their own, not routine items such as well child visits.
"This would be like if I sell you an insurance policy based on the way old house insurance worked, and then we change the rules so that every time a shingle blows off your roof, you can charge it to your insurance," Hieb explained. "Can you imagine what would happen?
"Insurance used to be priced by figuring in a certain certainty. You can't keep the same prices and be solvent in a time of uncertainty, when you've changed the rules to make totally uncertain how many times people utilize the health care. That's what's happened."
It turns out Obamacare has attracted lots of enrollees who seek health care often. A report from Blue Cross Blue Shield last month said new enrollees under Obamacare had 22 percent higher medical costs than people who receive coverage from employers.
The result was that in the individual market, which includes the Obamacare marketplaces, insurance companies lost money in 41 out of 50 states in 2014.
Dr. Jane Orient, executive director of the Association of American Physicians and Surgeons and an occasional WND columnist, said no one should be surprised Obamacare is causing insurers to lose money.
"Community rating and guaranteed issue always have that result," Orient told WND. "Maybe insurers trusted promises from our government, forgetting the government's abysmal record on honesty – and its load of unpayable debt."
President Obama has often bragged that under his health care law insurance companies can no longer deny coverage or charge more to those with pre-existing conditions. That's utter foolishness, in Hieb's view.
"How do you sell health insurance to very sick people?" Hieb asked. "That's like, do you sell fire insurance to somebody whose house is on fire? Of course you can't. That doesn't make any sense, and you can't do that with health insurance, either."
But under Obamacare, insurers have indeed sold health insurance to many sick people. At the same time very few young, healthy people have bought plans on the Obamacare exchanges. As a result, the Obamacare "risk pools" have become sicker and costlier than insurers had hoped.
The Obamacare market could stabilize if more young, healthy individuals signed up, but Hieb thinks that is unlikely to happen.
"The problem is, ironically, they have increased the price of insurance on the very young people they wanted to have," she said.
Hieb, an occasional WND columnist, said this price increase happened because of the Obamacare rule that mandates insurers may not charge older people more than three times what they charge young people for premiums. Consensus among actuaries is that health care spending for 62-year-olds is about five times that of 22-year-olds.
The rule was designed to protect older customers from getting gouged, but instead of lowering rates for older people, insurers ended up raising premiums for younger people to meet the three-to-one ratio. Hieb believes this opportunity to overcharge young people was why insurance companies backed the ACA in the first place.
In the old days, according to Hieb, young adults would buy health insurance as soon as they moved out of their parents' house. The insurance was so cheap, Hieb recalled, "it was stupid not to buy it."
It was not linked to a person's job, either; it traveled with its owner from job to job. Young people bought insurance when they were well and didn't use it often, because young people don't get sick often. But they paid their premiums over many years, and when they got old and needed to use their insurance more often, the insurance companies were there for them.
But today, Hieb noted, incentives have changed.
"We've made a situation where people don't routinely buy health insurance when they're 20 years old," she charged. "That's the problem."
She explained many young, healthy people opt to pay the tax penalty because it is less expensive than paying for an Obamacare insurance plan they are unlikely to use. If they do get sick and need insurance, they know they can sign up for a plan and insurers will not be allowed to deny them coverage. So it is that young, healthy people stay out of the Obamacare "risk pools" that need them to balance out the countless sick people in the pools.
"No insurance company in the real world can exist like that," Hieb admonished. "The insurance companies exist because people see the advantage of signing up when they're well, signing up when their house is not on fire so they have it when their house is on fire."
Orient offered her idea of how to entice more young, healthy people to sign up for Obamacare plans.
"Get rid of the mandates and give them an actuarially fair price," she suggested. "But that would get rid of the whole purpose of the ACA of gouging the low-risk subscribers to benefit the politically favored."
UnitedHealth, the nation's biggest health insurer, announced Tuesday it will limit its participation in the Obamacare exchanges next year to only a handful of states after having expanded to 34 states this year. This comes after the company lost $475 million on its exchange business in 2015. It expects to lose an additional $650 million this year.
As for Blue Cross Blue Shield, it already dropped out of the Obamacare exchange in New Mexico last year after their plans lost money. Now the CEO of Blue Cross North Carolina tells the Hill his company has lost $400 million due to its Obamacare plans and is considering dropping out of the marketplace.
The myriad problems associated with Obamacare don't happen in a free market, according to Hieb. She suggests the government step back and allow health insurance to be sold like car insurance, where a buyer can choose the deductible and what the plan covers. But as it is, the government tells health insurers they must cover certain things.
"When you do that, number one, the price of those procedures goes up, and number two, the price of insurance goes up – way up," Hieb said.
Her solution is a system in which customers pay cash for outpatient items and utilize "real, actuarial-based insurance" for items too expensive to afford. Then she believes the number of items too expensive to afford will come down.
"If the government got out of this and got out of the controls, then we'd have insurance companies coming up with products that people could afford and that actually worked," Hieb asserted. "And that's what happens in any other walk of life. Why do we not have a house insurance crisis? It's because we let the free market solve them. The free market will not create products that nobody can afford."
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