Obamacare Is Failing. Will It Take You Down, Too?

The nation’s largest health insurance provider is sick of Obamacare. UnitedHealth Group reported an incredibly profitable first quarter on Tuesday with nearly all of its business outperforming expectations save for one glaring exception — its Obamacare business.

The Affordable Care Act, which Obama touted in 2009 as “the most important piece of social legislation since the Social Security Act passed in the 1930s,” has turned out to be one of the biggest legislative failures since the 1930s.

Despite Obama’s promise that Obamacare would “deliver on the promise of real, meaningful health insurance reform that will bring additional security and stability to the American people,” it has made Americans no more secure and the insurance providers on which they rely a lot more unstable.

UnitedHealth Group increased its projected Obamacare losses for 2016 to $650 million from $525 million. It lost $475 million in 2015.

“We cannot broadly serve [the Obamacare exchanges] on an effective and sustained basis,” said UnitedHealth Group CEO Stephen Hemsley. He said the company’s Obamacare business will cover “only a handful of states” in 2017.

[lz_bulleted_list title=”Obamacare in Poor Health”]UnitedHealthcare lost $475M through ACA in 2015, estimates losses of $650 in 2016| Blue Cross Blue Shield paid out more in claims than it took in premiums through ACA in first 3 quarters of 2015|Obamacare enrollees had costs 22 percent higher on average in 2015 than people with employment-based coverage|Majority of enrollees in 2014 were via Medicaid[/lz_bulleted_list]

Indeed, Hemsley warned in November 2015 that the company “can’t sustain these losses … we can’t subsidize a market that doesn’t appear … to be sustaining itself.”

But the Obamacare exchanges are not only failing to sustain themselves currently — they are by design unsustainable. A 2015 study by the National Bureau of Economic Research discovered that the number of uninsured middle-class Americans barely decreased at all under Obamacare.

Because uninsured middle class Americans in good health are denied the many subsidies Obamacare offers for the poor, it is cheaper for them to forgo insurance and pay the Obamacare penalty, the report concluded.

If more private insurance companies jump the Obamacare ship, premiums will skyrocket at a pace quicker than they’re doing now.

This is, of course, a huge problem — it was these fees from healthier, wealthier Americans that were in theory to subsidize the newly insured poor. The Americans who are signing up for Obamacare are not only poorer, but they’re also sicker, due in large part to Obamacare’s ill-thought-out “special enrollment periods,” which effectively encourage people to wait until they actually need health insurance to sign up for it.

Roughly one in five Obamacare enrollees signed up during one of these enrollment periods, and they cost 10 percent more to insure than those who join during normal enrollment times — and are 40 percent more likely to eventually drop their plan, according to consulting firm Oliver Wyman. This puts even more strain on private insurance companies.

The nonprofit insurance provider Blue Cross Blue Shield also cautioned in March that new Obamacare enrollees had medical costs 22 percent higher on average in 2015 than people with employment-based coverage. This is a large part of the reason BCBS took in $20.4 billion worth pf premiums through the Obamacare exchanges in the first three quarters of 2015, but had to pay out $20.7 billion worth of claims.

Blue Cross Blue Shield Tennessee alone estimated a loss of over $150 million on individual plans in 2015, and projects another loss for this year despite increasing rates on ACA plans by almost 40 percent. The insurer is seeking another rate boost in 2017 “to try to get us to a level that makes it sustainable,” a spokesman said.

But if more private insurance companies jump the Obamacare ship as UnitedHealth Group did — further decreasing competition in exchanges that are already hemorrhaging money — the premiums will skyrocket at a pace quicker than they are doing now. And unless something is done to address the numerous losses insurance providers across the country are incurring through participating in Obamacare, the only option left will be the government.

Indeed, numerous conservatives have claimed that Obamacare was designed to intentionally fail and to take the private health insurance market along with it — that it was a pretense for imposing a socialist-style, single-payer health system on the American people, something that politicians like Bernie Sanders have long advocated.

“We know beyond a shred of a doubt that [Obamacare] works,” Obama said in March 2015, praising the law on its fifth birthday. Unfortunately, the only thing Obamacare is succeeding in doing is destroying the private insurance market.