Prognosis Grim: Obamacare’s Exchanges are Failing

There’s just no way to tap-dance around the stunning conclusion any longer: Obamacare is in serious trouble.

Last month, Aetna decided to dump 80 percent of it’s Obamacare subscribers, UnitedHealth dramatically reduced the number of states it offered plans in from 34 to 3, and Humana is offering plans in just 156 counties, an 88 percent reduction. The only ray of hope for Democrats to hang on to was Blue Cross Blue Shield plans, which seemed to be holding relatively steady in Obamacare markets across the U.S.

That is, until now.

Just this week the Blue Cross plan in Nebraska announced it was leaving it’s state marketplace entirely after losing $140 million since 2014. And the Blue Cross plan in Tennessee announced its decision to exit the Obamacare exchange in Nashville, Memphis and Knoxville after projecting losses of nearly half-a-billion dollars by the end of 2016.

It isn’t surprising that insurers are dropping out of the market. For years they’ve been sustaining astounding financial losses on the hope that one day things would stabilize and be profitable. That day never came, and more importantly, it doesn’t appear anywhere on the horizon.

“Given that most carriers have experienced losses in the exchanges, often large losses, it makes sense that most exchange insurers will request significant rate increases for 2017,” Michael Adelbert, a former CMS official under President Obama told The Hill. “Market exits are not out of the question if an insurer is looking at consecutive years of losses and regulators are unable to approve rates that get the insurer to break-even.”

The billions in losses are a result of insurers’ “risk pool” – the balance of healthy and sick enrollees in a given plan – not containing enough young adults, who have been asked to subsidize Obamacare. David Barnes explains in the Wall Street Journal:

ObamaCare won’t work without young Americans like me, and the Obama administration knows it. That’s why the president is holding a Millennial Outreach and Engagement Summit focused on the Affordable Care Act at the White House on Tuesday. But no matter what the president says, many young Americans simply aren’t buying what he’s selling—mainly because we can’t afford it.

The administration has targeted my generation to sign up for ObamaCare for one reason: We’re healthy. The health-insurance companies selling plans on the law’s exchanges need us to pay a pretty penny in premiums without using much medical care. We’re supposed to subsidize the system so that it stays afloat. That was the plan, anyway. It fell apart when we didn’t sign up in droves like the White House expected.

Knowing that his legacy hangs in the balance of Obamacare’s success, President Obama has resorted to taking the extraordinary step of using the IRS to bully young adults into signing up for Obamacare. The White House plans to use information about which young people paid a penalty to the IRS for not purchasing insurance to target e-mails and notifications about steeper penalties coming next year.

This is a stunning and improper use of sensitive—and supposedly private— tax information. But young adults won’t be browbeaten into propping up Obamacare with the little bit of money we have. As Barnes writes, the reason is simple:

“We’re at the start of our careers—and at the bottom of the income ladder—so paying so much for something we likely won’t use makes little sense. The IRS penalty of $695 or 2.5% of our income is often cheap by comparison. We may be young, but we can do the math.”

As of now Hillary Clinton has been allowed to skate by without being forced to explain the obvious failures of Obamacare to deliver on Democrats’ promises of better, cheaper insurance. Health care, much less Obamacare, was a topic of discussion in the first debate. And most of the public doesn’t even know of the IRS’ outrageous intrusion into protected taxpayer information. It’s time to make Obamacare an issue again – for young adults…for everyone.