ObamaCare Death Spiral: America’s Largest Health Insurer Ready to Bail

Jason Reed/Reuters

The departure of UnitedHealth Group could be the death blow not even ObamaCare’s most stubborn and dishonest defenders can spin away.

Watching one state co-op after another keel over from fiscal heart attacks was enough handwriting on the wall, as UnitedHealth CEO Stephen Hemsley specifically mentioned the failure of co-ops as one of the major factors making his board nervous.

As Forbes describes it, UnitedHealth basically dipped a toe in the ObamaCare waters but might be about to pull it back before they get frostbite:

UnitedHealth Group in a surprising announcement, said this morning it has revised its profit expectations for the rest of the year due to what it called a “deterioration” of its individual commercial insurance offerings on government-run exchanges under the Affordable Care Act and offered no commitment it would stay in the business beyond next year.

The nation’s largest health insurer said it was “evaluating the viability of the insurance exchange product segment,” pulling back on its marketing efforts for individual exchange products for next year and “will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017.” The insurer sells individual plans on public exchanges in 24 states and covers more than a half million Americans in these plans.

UnitedHealth had been among the more cautious in offering coverage to individuals on the exchanges, entering only a handful of markets in 2014, the first year such coverage became available. The company expanded for this year and only recently said it would expand its offerings in nearly a dozen more states for 2016. But this morning, it said the business has deteriorated and it expects a reduction in earnings for the fourth quarter of this year of $425 million, or 26 cents per share “driven by 2015 and 2016 exchange product pressure.”

This is portrayed as a stunning reversal from what the company was saying just a month ago:

Just last month, UnitedHealth president and chief financial officer David Wichmann touted growth for the individual commercial business, saying “we continue to expect exchanges to develop and mature over time into a strong viable growth market for us.”

But UnitedHealth and other insurers need more Americans to come into the public exchanges because the patients that are signing up for coverage are sicker, making a “higher overall risk pool,” insurance executives say. It’s a key reason many Americans are seeing rate increases of 10 percent or more across the country on public exchanges.

That’s how the death spiral works: young healthy suckers who were supposed to get their pockets picked to fund this idiotic scheme are taking a pass, depriving the insurance companies of the easy money Obama promised them, and their bailout mechanisms have been disabled.

The Washington Examiner notes that “several programs designed to mitigate risk for insurers through federal backstops go away” in 2017, essentially pulling the “training wheels” off the Affordable Care Act and leaving insurers to “thrive on their own.” Great – it’s a battered, rusty bicycle pedaled by a kid already covered in cuts and bruises, and the training wheels are coming off.

The departure of such a big player would probably scare some of the remaining smaller fish out of the pool. (Frankly, hearing them talk about getting out is going to rattle a lot of cages.) It will also lower the poor quality of ObamaCare insurance even further, leaving consumers with fewer options and less competition… and, as the Washington Examiner points out, dumping even more expensive high-risk enrollees on the surviving providers.

Maybe UnitedHealth is floating this story because they want to rattle the government’s cage, threatening a blockbuster walkout unless some mixture of taxpayer loot and regulatory benevolence is offered to keep them on board. One suspects the Democrat Party doesn’t want headlines about the biggest player in health insurance cashing out of ObamaCare in the heat of a presidential election year.

Another thing that will scare more people away from ObamaCare, and make the death spiral steeper, is the growing realization that Obamacare’s crappy health insurance is virtually useless, because the out-of-pocket expenses are so high.

This was a very deliberate part of the ObamaCare scam – the true costs were hidden from consumers for as long as possible by turning them into financial bear traps that hapless customers wouldn’t really notice until they tried to use their “benefits.” The resulting complaints would be anecdotal evidence of failure, and the ObamaCare con artists believe, with good reason, that their control of the media would immunize them against anecdotal evidence. When was the last time you saw a major media organization publish a roundup of sob stories from dejected ObamaCare customers?

It looks like ObamaCare’s inoculation against media viruses is running out, because just such a litany of complaints was published this week… by the New York Times. And the title of the piece was “Many Say High Deductibles Make Their Health Law Insurance All but Useless.”

Ouch. The only favor the NYT could do for the rotten scheme it helped to force down our throats was keep the word “ObamaCare” out of the headline. “Health law insurance?” Really, guys?

Actually, the Times does another favor by uncritically relaying the hilariously false claim by the Administration that “low premiums” are available on the marketplaces – premium sticker shock from ObamaCare is a major crisis in most markets – but at least the body of the story proceeds honestly, with the devastating revelation that ACA insurance gets far more expensive if the buyer tries to, you know, use it:

“The deductible, $3,000 a year, makes it impossible to actually go to the doctor,” said David R. Reines, 60, of Jefferson Township, N.J., a former hardware salesman with chronic knee pain. “We have insurance, but can’t afford to use it.”

In many states, more than half the plans offered for sale through HealthCare.gov, the federal online marketplace, have a deductible of $3,000 or more, a New York Times review has found. Those deductibles are causing concern among Democrats — and some Republican detractors of the health law, who once pushed high-deductible health plans in the belief that consumers would be more cost-conscious if they had more of a financial stake or skin in the game.

“We could not afford the deductible,” said Kevin Fanning, 59, who lives in North Texas, near Wichita Falls. “Basically I was paying for insurance I could not afford to use.”

He dropped his policy.

[…] “Our deductible is so high, we practically pay for all of our medical expenses out of pocket,” said Wendy Kaplan, 50, of Evanston, Ill. “So our policy is really there for emergencies only, and basic wellness appointments.”

Her family of four pays premiums of $1,200 a month for coverage with an annual deductible of $12,700.

In Miami, the median deductible, according to HealthCare.gov, is $5,000. (Half of the plans are above the median, and half below it.) In Jackson, Miss., the comparable figure is $5,500. In Chicago, the median deductible is $3,400. In Phoenix, it is $4,000; in Houston and Des Moines, $3,000.

Democrat spinners are still spinning, but no one can make an honest case that this absurdly low-quality insurance is worth anything close to the billions of dollars poured into ObamaCare, never mind the damage to our constitutional rule of law. Defending this failed program is like telling someone to be happy with a lemon automobile he just paid $250,000 for because the radio sounds okay, and the air conditioning sort of works. Just ignore that it gets 4 gallons to the mile and can’t go faster than ten miles an hour, and accept that it’s what you deserve.

Don’t believe any of that for a second. America can do a lot better than ObamaCare. At this point, if Republicans win the White House and repeal it in 2017, hardly anyone will notice it’s gone, because there isn’t much left… and what’s left is not worth another stolen dollar of taxpayer money. The insurance companies certainly don’t seem to think it’s worth their money.


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