HHS Says ObamaCare Is Too Big To Fail

Obamacare Hurts sm

Last week, ObamaCare was hit with a body blow as one of the nation’s major health insurers, United Healthcare, announced it was pulling back from Obamacare in 2016 and may not participate at all in 2017:

UnitedHealth Group Chief Executive Stephen J. Hemsley said the company isn’t willing to continue its losses into 2017. UnitedHealth has already locked in its exchange offerings for 2016, but it is pulling back on marketing them during the current open-enrollment period to limit membership, which it said last month totaled around 550,000.

The company will make market-by-market determinations in the first half of next year about whether it will continue selling products on the exchanges.

“We can’t sustain these losses,” he said. “We can’t subsidize a market that doesn’t appear at this point to be sustaining itself.”

UnitedHealth made the move amid reduced expectations for growth on the exchanges, the anticipated shutdowns of the majority of the health law’s nonprofit cooperative insurers, and rising costs as its own enrollees continue to increase their rate of health-care use. Mr. Hemsley emphasized problems with consumers “coming in and out of the exchange system to use medical services,” or essentially signing up for health plans when they need to cover health expenses—an issue also highlighted by other insurers.

It isn’t only this one insurance company, other insurers are looking for a door, and half of all healthcare exchanges have folded:

Larry Levitt, a senior vice president at the Kaiser Family Foundation, said UnitedHealth’s concerns may, in part, reflect doubts that it can attract many more customers, particularly healthy people with low medical expenses who help make the business profitable. And he suggested that the Obama administration’s modest enrollment forecast may have spooked insurers.

Last month, HHS officials predicted that 10 million people will have ACA coverage by the end of 2016. That would be the same enrollment as early this summer and only slightly more than 9.1 million officials expect by the end of this year.

Other insurers have hinted that they are struggling in the marketplaces. Blue Cross Blue Shield of New Mexico announced in August that it lost $19.2 million last year in coverage offered to 35,000 people on plans sold on and off of the exchange and would be pulling out of the state’s health insurance exchange.

ObamaCare was nothing more than crony capitalism, a program designed to reward major Democrat contributors and donors to progressive causes in Pharma and the healthcare sector. Its business plan was to make people buy a product they did not need or want with money that they did not have. The government, in exchange for feeling good about itself, was supposed to act as a marketing agency and provide a slush fund to cover losses.

Now the business model is failing because, to the surprise of no one, many young health people, who were the milch cow for this Ponzi scheme, are elected to pay penalties rather than see thousands of dollars in income siphoned off without any benefit to themselves.

Naturally, the rent-seekers in this scheme are turning to the government to make good on their losses:

Tavenner, who was administrator of CMS (ed note– odd, no, that the former head of the program administering ObamaCare is now a lobbyist for insurance providers to ObamaCare) until early this year, noted nearly 800,000 consumers had to find other insurance coverage for next year because there wasn’t enough money in the program that profitable insurers fund to help offset losses to smaller, less profitable ones. More than half of the 23 non-profit insurance co-ops set up under the ACA had to close.

“When health plans cannot rely on the government to meet its obligations, individuals and families are harmed as a result,” said Tavenner. “The administration must act to ensure this program works as intended and consumers are protected.”

Insurers were only paid 13% of what they were owed for 2014 plans under this risk program.

And the Center for Medicare and Medicaid Services, the aforementioned CMS, has sent a letter to insurers acknowledging what seems to be a massive difference between what the insurers have lost ($2.87 billion) and the cash in the fund to cover those losses ($362 million). (More analysis here.) The letter seems to imply that CMS will make good on these losses from future collections. That is fine so long as they collect enough funds for 2015 to cover 2014 and 2015. Otherwise, they will need to go to Congress.

The administration tried a bail out earlier in the year by simply giving money to insurers and was stopped by [mc_name name=’Sen. Jeff Sessions (R-AL)’ chamber=’senate’ mcid=’S001141′ ]. This coming year ObamaCare will need an infusion of cash, via a Congressional appropriation, to make good the losses by the insurers who were instrumental in setting up this monstrosity. Then [mc_name name=’Rep. Paul Ryan (R-WI)’ chamber=’house’ mcid=’R000570′ ] will face a huge challenge (I don’t mention McConnell because no sane human believes he wants to get rid of ObamaCare). Will he slide an appropriation through the House, or will he be the man that sets this un-Constitutional morass toppling under the weight of its own corruption and mismanagement?