The nation’s largest health insurer, UnitedHealth, announced Tuesday it has lost at least $1 billion under Obamacare’s insurance exchanges, and it can no longer afford to participate in a number of states, including Arkansas, Georgia and Michigan.
UnitedHealth is just one of the many health-insurance companies sounding the alarm that they will have to drastically hike premiums in the coming year or consider exiting the individual health-care marketplace in the wake of massive losses sustained over the first couple of years under the rules of President Obama’s signature health-care law.
A report in the Hill newspaper quotes Aetna CEO Mark Bertolini as well as multiple policy experts concluding the current track is unsustainable for the private sector insurance. Furthermore, a report from McKinsey & Company shows insurers lost money in the individual market in 41 of 50 states in 2014.
Galen Institute President Grace-Marie Turner told WND and Radio America she hears the very same thing from health insurance providers.
“I have talked with insurance company CEOs. I’ve talked with people in professional associations,” Turner said. “They’re very worried because they were virtually assured by the Obama administration that the market would have stabilized by now.”
She said this is not only a distress call to policy makers but a warning to consumers that much higher premiums are on the horizon.
“These reports and these announcements and these news stories are really warnings from the insurance industry, ‘Get ready because our premiums are going to have to be much higher if we’re going to continue to participate in the market. And if you tell us that you’re not going to approve those premium increases, we will drop out,'” Turner said.
Turner said insurance companies bought the Obama promise “that there would be enough young, healthy people in the markets to be able to offset the sicker, older people.” But something happened on the way to huge profits guaranteed through the individual mandate.
“The escape hatches [the health-care law] created, the weakness of the individual mandate has meant that they wind up with many more people who are sicker and using many more health care services than anticipated, and the premiums were not set to adjust to that,” Turner explained.
She said the bad financial ideas underpinning the law are being exposed.
“They also thought they were going to get this other money through a lot of risk corridor reinsurance payments as well as the tax credits that people get to purchase premiums,” she said. “So they thought all of those were going to make this a stable market. It’s only a stable market in the sense that the government is propping it up artificially with all these other funds and it’s not enough.”
Listen to the WND/Radio America interview with Grace-Marie Turner:
Turner said insurance companies are also getting crushed by people gaming the system. She said people sign up for coverage, get a lot of expensive health care right away and then cancel their coverage, only to sign up at the same government-guaranteed rate in the next open enrollment period.
She said this whole sea of red ink exposes the fundamental flaws with the law.
“It’s not a sustainable market,” Turner said. “You cannot have government dictating how a market works. Only the market can do that and we’re seeing the failure of government-controlled health care.”
The insurance industry is likely to elicit few tears from opponents of the Obama health-care law as conservative activists implored companies not to get on board the Obama bandwagon. The industry didn’t listen, but Turner said watching them leave the marketplace is not an option, either.
“We need the private health insurance companies to continue to participate and to offer insurance if we are going to have a private market,” she said. “You don’t want them to fail.”
Turner is hopeful that the issue will get a lot of attention in the 2016 election season. She is confident that despite the rhetoric of some Democratic Party candidates, the American people do not want government-run health care.
“The support for single payer among the American people is as low now as it has ever been in decades,” said Turner, who advocates health competition in the private sector regulated by the states.