Health insurance companies are 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 says she hears the very same thing from health insurance providers.
“I have talked with insurance company CEO’s. I’ve talked with people in professional associations. They’re very worried because they were virtually assured by the Obama administration that the market would have stabilized by now,” said Turner.
She says 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,'” said Turner.
Turner says 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,” said Turner.
She says 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. 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,” said Turner.
Turner says insurance companies are also getting crushed by people gaming the system. She says 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 says this whole sea of red ink exposes the fundamental flaws with the law.
“It’s not a sustainable market. 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,” said Turner.
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 says 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. You don’t want them to fail,” said Turner.
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 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.
