Covered California is so desperate to keep insurance companies on its Obamacare exchange that the state plans to guarantee profits to the giant corporations.
Breitbart News reported early this month that despite the annual inflation rate of only 1.6 percent, Covered California is granting healthcare insurers average premium increases of 12.5 percent. But that appears to not be enough to lure insurers to stay on the exchange, if President Trump ends U.S. Treasury “cost-sharing” side payments to insurers that the courts have ruled are illegal.
According to the a study by the non-partisan Congressional Budget Office (CBO), titled “The Effects of Terminating Payments for Cost-Sharing Reductions,” Obamacare exchange insurance premiums will spike by another 20 percent in 2018. Given that 75 percent of Obamacare enrollees received free insurance through Medicaid, the CBO estimates that the U.S. deficit will jump by another $194 billion between 2017 and 2026 as a result.
Obamacare was sold to voters on a promise to slash healthcare insurance premiums by up to $2,500 per family. But new mandatory rules caused insurance premiums to spike by 68 percent between 2010 and 2015, according to the National Association of State Legislatures.
The national average cost of healthcare for a family of four in the United States is now $17,322. But in highly-regulated California, the average family healthcare premium is even worse, at $18,045.
With the tsunami of cash flooding into the health insurance industry since 2010, profits have more than doubled, and the healthcare stock index is up by 251 percent. The industry’s biggest Obamacare winner has been America’s largest health insurer, United Healthcare. With profits more than tripling since Obamacare passed, United Healthcare’s stock is up a stunning 592 percent.
But with concerns that President Trump or the courts will stop making illegal cost-sharing payments, big insurers like Anthem Blue Cross, Aetna and Humana are duping Obamacare coverage for 2018. One of the reasons that United Healthcare’s stock has been hitting a series of new all-time-highs this month is that the company is cutting its Obamacare coverage from 34 states in 2016 to 3 states in 2017, and possibly leaving Obamacare completely in 2018.
With many of the top health insurance industry players jumping ship on Obamacare, Southern California Public Radio reported that the board of Covered California will consider a plan on August 17 that would incentivize health insurers to offer coverage by guaranteeing that for any lack of profit or losses they suffer in 2018, California will guarantee them the right to jack up profits with higher premium increases in each of the following three years.
Covered California is referring the to the plan as an initiative to address market uncertainty over the actions that might be taken by the Trump administration and the courts.
But “[a]n economic system characterized by close, mutually advantageous relationships between business leaders and government officials” is the Oxford Dictionary’s definition of crony capitalism.