ObamaCare's Death Spiral Has Begun
Will the last one out of ObamaCare please turn off the lights?
That's a question that health insurers and individual Americans both may want to start pondering. Recent events such as the departure of the insurance company Aetna from the vast majority of state exchanges show that ObamaCare is entering the death spiral that experts have long predicted. Insurers are now heading for the exit, fast — and consumers won't be far behind them.
In the wake of massive losses, insurance companies are instinctively engaging their fight-or-flight instincts. The two big insurers remaining on state exchanges — Anthem Blue Cross and Blue Shield, and Cigna — are still evaluating the risks of a collapsing system, trying to determine if they should abandon the ObamaCare exchanges altogether or cope with the realities of increasingly high-cost care and coverage.
ObamaCare's tailspin is the manifestation of mounting tensions between health insurance companies, their customers, and the federal health care bureaucracy. The inevitable losers in this fight? Those who were promised reliable, affordable coverage for their health needs.
Premiums are widely projected to skyrocket in 2017, but many Americans have already seen firsthand how ObamaCare has further entangled them and their doctors in a maze of red tape.
In recent weeks, insurers in 43 states proposed similar hikes, with the average rate increase falling in the double digits for individual plans, according to data collected on the Rate Review tool at HealthCare.gov. For example, Blue Cross Blue Shield of Texas, facing a massive $770 million loss for its ObamaCare exchange plans, requested a 58% premium hike for over 600,000 customers.
In New Mexico, Blue Cross Blue Shield has requested an 82% rate increase for an individual HMO plan sold on the exchange. But nothing comes close to the increase requested by insurer Phoenix Health Plans of Arizona: a whopping 122.8% average rate hike for all of its plans.
Recent analysis shows that the average rate increase requested by insurers across the country is24%. This is a stunning increase since initial rate requests were filed this summer. At that time, the Kaiser Family Foundation found that rate hikes for the "most common plan choices" in 14 major cities averaged about 10%. But insurers have adjusted their expectations, and their rate requests, since then.
Between rate increases and the severe decline in competition as insurers make their exits, policy holders will be left scrambling this fall to determine whether they can cut back elsewhere to afford the growing costs of health insurance. If not, they'll be forced to swallow the bitter pill of paying the tax penalty imposed by ObamaCare's individual mandate on those who lack coverage.
The dramatic rise in the cost is the result of ObamaCare's new reality making it more expensive for insurers to provide the affordable coverage initially promised. For months, many health insurers have been submitting requests for significant rate hikes on insurance plans offered through ObamaCare exchanges, as anything above a 10% increase requires approval by state or federal health care officials.
Despite the rising tension between insurers and their customers over these rates, both will soon be forced to put their differences aside and take on the bureaucracy strangling the health care market and restricting access to care.
The administration has tried its best to prop up the president's legacy-defining policy with taxpayer bailouts and false rhetoric, but in the end, these premium hikes confirm that neither the costs nor the care they projected are attainable.
It's still too soon to predict whether insurers or their customers will be the last to make their exodus from ObamaCare, but one thing is certain: The American people will be forced to bear the final cost.
- Hilgemann is the CEO of Americans for Prosperity.
- http://www.investors.com/politics/commentary/obamacares-death-spiral-has-begun/
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