Return of the Death Spiral: ObamaCare Faces ‘Meltdown’ in 2017

Whoever wins the White House in 2016 will have the pleasure of dealing with an ObamaCare crisis that The Hill describes as an impending “meltdown,” although we already had a perfectly good name for it: the ObamaCare Death Spiral.

The fourth ObamaCare signup period begins about one week before Election Day, and it will end about one week before inauguration on Jan. 20. After mounting complaints from big insurers about losing money this year, the results could serve as a kind of judgment day for ObamaCare, experts say.

“The next open enrollment period is key,” said Larry Levitt, senior vice president of the Kaiser Family Foundation.

The Obama administration has struggled for several years to bring young, healthy people into the marketplaces, which is needed to offset the medical costs of older and sicker customers.

These problems are coming to light this year, as insurers get their first full look at ObamaCare customer data. Some, like UnitedHealth Group, say they’ve seen enough and are already vowing to leave the exchanges.  

Levitt and other experts warn that if the numbers don’t improve this year, more insurers could bolt. That would deal a major blow to marketplace competition while also driving up rates and keeping even more people out of the exchanges.

The ObamaCare Death Spiral is caused by young, healthy customers choosing not to be sucked dry by a system designed to penalize them for being young and healthy. They steer clear of overpriced, poor-quality ObamaCare insurance, which means premiums must be raised on everyone else… prompting the next wave of prospective chumps to decide they don’t want to pay jacked-up premiums and sky-high deductibles to keep the scheme floating.

Also, as The Hill noted, insurance providers are bailing out of the system because even those “sticker shock” premiums aren’t really high enough. Prices are still being pushed down for political reasons, and providers are realizing they can’t absorb the losses. Their departure means fewer choices for consumers, less competition… and ever-higher prices.

Barack Obama blew trillions of our dollars creating a system that works exactly the opposite of how free-market competition works, with all of the market’s drawbacks, but none of its virtues.

The answer, of course, will be even more socialism and government control, in the form of a decrepit single-payer system — bigger, more corrupt, and less efficient than the one America’s military veterans are currently stuck in.

We’re not quite there yet, so Hillary Clinton wants to raid taxpayers for more subsidies and bailouts, to keep ObamaCare running until it has killed the last vestiges of capitalism in the healthcare system:

Clinton has already laid out plans to help boost enrollment by making coverage more affordable for people who are still priced out of ObamaCare.

Like Obama, she vowed to invest in advertising and in-person outreach to help more people enroll. Clinton would also increase ObamaCare subsidies so that customers spend no more than 8.5 percent of their income on premiums — down from 9.5 percent under current law.

She has also proposed a tax credit of up to $5,000 per family specifically to offset rising out-of-pocket costs — a side effect of cheaper plans offered under ObamaCare.

Yes, that’s what ObamaCare needs: more advertising.

The Hill tells us “insurers have fretted for years about lower-than-expected enrollment through ObamaCare,” although somehow the media failed to mention it until now, and nobody warned us about that fretting during the absurd Obama hagiography at the Democratic National Convention.

Last year, more than 11 million people bought coverage through the exchanges. While that figure beat the Obama administration’s expectations for 2016, it’s a huge drop from the Congressional Budget Office’s initial projections that 21 million would be enrolled by that time.

Now, several high-profile insurers are raising new concerns about the healthcare law’s mix of customers and questioning whether their companies can keep selling ObamaCare plans.

Part of those concerns stem from distrust of the Obama administration after its key marketplace stabilization program — known as risk corridors — was too cash-strapped to pay back the insurers. In the first two years of the healthcare law, more insurers than expected have ended up with balance sheets in the red. As a result, the risk corridor pool was left with only about $1 to cover every $10 in claims.

In other words, even moving the enrollment goalposts can’t help ObamaCare defenders pretend the program is healthy any more. Quietly cutting the projected enrollment figure by 25 or 30 percent, so they can claim enrollment is meeting expectations, no longer fools anyone… especially not insurance companies facing hundreds of millions of dollars in losses.

The system needs massive taxpayer bailouts, but no one in either the current Administration or Clinton’s campaign wants to admit it. If Clinton is allowed into the Oval Office, the most likely outcome will involve generous donations to the Clinton Foundation by insurance providers, followed by the President announcing her exciting new multi-trillion-dollar plan to open those “risk corridors” wide.

In the last month, two major insurers — Aetna and Anthem — both reversed course on their plans to expand in the marketplace. Now, all five of the nation’s largest insurers say they are losing money on the exchanges.

“From a policy point of view, we’re basically seeing the exchanges unravel,” said Michael Abrams, a healthcare strategist with Numerof & Associates who consults for insurers including UnitedHealth Group.

“More than anything else, it’s a serious symbolic blow to ObamaCare,” he said.

The two companies’ abrupt decisions to pull back from ObamaCare have baffled healthcare experts. Both Aetna and Anthem had previously been optimistic about the marketplace, unlike UnitedHealth, which had been cautious from the start.

Funny, there wasn’t any talk of “symbolism” during the unpleasant quarterly earnings calls that preceded Aetna and Anthem’s decisions to bail out.

Another analyst quoted by The Hill, Professor Leighton Wu of George Washington University, suggested insurance companies were “posturing,” threatening to pull out of the system unless they get a better deal.

That’s always possible, although it’s not exactly the experience Americans were promised when ObamaCare was rammed down our throats in a midnight congressional vote. Nobody told us we’d spend the next few years nervously watching insurance giants threaten to bail out of collapsing exchanges, and wondering if they were serious. Also, it seems like every exchange failure and insurance company retreat since ObamaCare went live has been preceded by expert speculation that the companies were only threatening to bail as a negotiating tactic.

If the next enrollment period proves as grim as analysts fear, there should be no further questions about whether insurance providers are faking their distress to elicit bureaucratic sympathy, or whether young people are avoiding ObamaCare because they just haven’t seen enough taxpayer-funded propaganda about how wonderful it is.

If it helps the DNC Media to understand what’s coming our way next year, watch the video below and imagine ObamaCare is the plane, Chuck Yeager is an insurance company CEO, and the American people are standing right about where the plane is going to hit.

 


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