Obamacare Goes for Broke

The mass exodus of insurers from the Affordable Care Act marketplaces this year will leave nearly 1.5 million Americans in 32 states without coverage for 2017. Media coverage has focused on insurance giants such as UnitedHealth Group, Aetna, and Humana — but numerous other startups and smaller health insurance companies have closed shop as well, leaving local communities in a panic over rising prices and limited choices.

Nearly 20 percent of all consumers in the Obamacare markets will have only one choice for health insurance, according to an estimate from the Kaiser Family Foundation.

With the 2017 price hikes, one Minnesota family will be paying $54,000 in medical expenses before receiving any help.

Republican presidential candidate Donald Trump acknowledged this crisis Wednesday night during the debate, noting that the rising premium costs are “destroying our country” and that the health care law would soon “die of its own weight.”

Local communities are hurting the most because of these price hikes. Land of Lincoln Health, a three-year-old startup in Chicago, Illinois, has shut down after heavy losses. Their 49,000 customers will have to look elsewhere for affordable coverage. In Florida, more than 400,000 people will lose their coverage under the Affordable Care Act. Minnesota seems the hardest hit, however — with 20,000 people at a loss for coverage and price increases of more than 50 percent.

Government subsidies will insulate some families from rising costs, but middle-class customers are shouldering staggering costs. Minnesota House Speaker Kurt Daudt has mentioned a local farming family of his acquaintance that pays $2,300 a month in premiums to cover the parents and their child. Their deductible is up to $13,000, which adds up to $40,000 a year in out-of-pocket expenses before any benefits kick in. With the 2017 price hikes, this family will be paying $54,000 in medical expenses before receiving any help.

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“For lower-income customers, the federal subsidies only mask the symptoms of the dramatic cost increases,” said Robert Moffit, senior fellow at the Heritage Foundation, in an essay comparing Obamacare to “multi-organ failure.”

Related: Obamacare: Millennials Aren’t Buying It

Even people who are normally self-sufficient will have to turn to government help to make ends meet. Debra Muller, chief executive officer of Avera Health Plans Inc., in South Dakota, told LifeZette government subsidies will be part of their marketing strategy to help make premiums and deductibles a little more affordable for the average customer.

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“We are encouraging people this season to find out if they’re eligible for a tax credit,” Muller said. “We live in a fiercely independent piece of real estate here in South Dakota. And they aren’t necessarily embracing tax credits or subsidization of their premiums. They could be eligible for it, but they’ve just made a choice not to.” She added, “There are a serious number of folks who are eligible for a tax credit. They just haven’t taken advantage of it. They will probably this year take a look at it and take advantage of it in order to offset the premium increases.”

Muller also noted that the price hikes at Avera were relatively small compared to other carriers in the state.

Insurers across the country are increasing their costs anywhere from 11 percent on the low end in Oregon, Tennessee, and Maine to 44 percent in Vermont and 67 percent in Minnesota. These price increases have been the result of insurance carriers trying to offset the costs of a high number of sick customers without healthy customers to balance the risk pool.

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Some have questioned the necessity of these price increases, however — especially since the health insurance CEOs still rake in the big bucks. The CEOs at Cigna, Humana, Aetna, and Coventry all report between $10 and $18 million in salaries, not to mention millions in benefits and stock options. Since 2000, these high-ranking officials have received more than $1 billion in compensation. And insurance company overhead has increased by 95 percent during the same period. It’s possible some of these price hikes continue to pad the pockets of people in the closed corporate loop.

Related: Obamacare Is Stealing Our Eating-Out Money

But the government isn’t holding up its end of the deal, either. The Affordable Care Act promised to compensate the losses of the insurance companies who participated in the public marketplaces for the first three years of its implementation. However, losses from all the companies were so extreme that the government hasn’t been able to make good on its promise, and the companies are suing for violation of contract. The government bailouts are backlogged to 2014 — without any way to fund them.

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There’s no easy fix, Muller said. “If there are some rational thinkers and policy decision makers that can start focusing on what needs to happen to get this to be a risk pool that is balanced and that we can make appropriate adjustments to — then I think there are pieces [of the ACA] that can be kept that people like.”

Problems in the individual policies, in particular, “absolutely need to be corrected,” she said.

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