Obamacare is falling apart even sooner than expected. Both insurers and patients say the new plans are unaffordable. That’s a bad sign for the “Affordable” Care Act.
When the first exchange plans launched in 2014, I said the program would help certain groups for a while but wasn’t long-term sustainable. My reason: the “reforms” did almost nothing to reduce bloated costs. I gave it five years before we would be right back where we started.
I was wrong. With year three about to begin, the dominoes are already falling.
The first hint was the collapse of a dozen insurance co-ops like New York’s Health Republic, which said it September it would wind down its operations by Nov. 30. They were apparently even more non-profit than expected.
The Affordable Care Act included a “risk corridor” plan that should have prevented this scenario. Profitable insurers paid into a fund that would subsidize losses in other plans.
As it turned out, profits were so scarce that the fund could only pay out 13 cents for each dollar of losses it should have reimbursed. That’s why Health Republic and the other co-ops shut down.
UnitedHealth Care (UNH), the nation’s biggest for-profit health insurer, said last week it was losing money on its Obamacare plans and might stop participating after 2016. That will leave Aetna (AET) and Anthem (ANTX) as the largest providers. Both say they will stick it out – but so did UnitedHealth until just last week.
Meanwhile, convincing people to buy Obamacare plans is getting harder, not easier.
Millions are finding that narrow networks and high out-of-pocket costs make it difficult to use their shiny new insurance cards.
So, two years in and we see that insurers, doctors, hospitals, patients and taxpayers are all unhappy with Obamacare. Is this so-called reform working for anyone at all?
Yes. Drug companies have done well
… but their gravy train is running out of fuel, too.
Right now terrorism is in the headlines, but I think by next summer we will see health care is once again a major campaign issue. Election Day is Nov. 8, 2016 – one week after open enrollment starts and everyone sees their 2017 choices. I’ll be it won’t be pretty.
Now, it is certainly tempting to say, “I told you so” and cackle with glee as Obama’s signature achievement goes up in smoke. Yet the collapse hurts real people. Obamacare is not the answer, but the pre-Obamacare situation was not much better.
Republicans say they want to “repeal and replace” Obamacare. I agree, but replace it with what? That’s the tough part. All the alternative plans I’ve seen are vague, presumption-filled outlines.
Obamacare is proving what doesn’t work. Now we need to find out what does.
Patrick Watson is an Austin-based financial writer.
Follow him on Twitter @PatrickW.
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