Wednesday, August 24, 2016

A Bitter Lesson Learned

Private health insurers jumped at the chance to
enter a dubious bargain with the Democrats
six years ago: support passage of the Affordable
Care Act in exchange for being able to grow
their businesses with federally subsidized customers
who were required, under the ACA's Individual
Mandate, to purchase insurance. What could
go wrong?

Plenty, as it turned out. These insurers are losing
money on what they thought was a can't-miss
deal. Aetna was the most recent insurer to admit
as much in its quarterly earning report. Although
Aetna managed to reduce its losses accrued from
being conned by the Obama regime, the firm
remained unprofitable in 2015. "We continue to
have serious concerns about the sustainability of
the public exchanges," CEO Mark Bertolini
confessed in a call with investment analysts.
Aetna is very worried about the stability of the
risk pool, including enforcement of standards.
To hike enrollment the Department of Health
and Human Services eased the way for customers
to wait until they were sick to purchase insurance,
offering coverage of "pre-existing conditions",
something akin to buying auto insurance after
wrecking one's car. This loads the risk pool with
sicker people and disrupts normal insurance
actuarial calculations.

Aetna is quite lucky, however, compared to some
of their competitors; UnitedHealth reported that
it may lose $1 billion (!) over 2015-2016 on its
involvement with ObamaCare. And Blue Cross and
Blue Shield of North Carolina says it expects to lose
$400 million on snapping up the bait. Many critics of
the ACA a/k/a ObamaCare claim that it is designed
to work precisely this way, to drive out private
health insurers and thus pave the way for government-
run health coverage, a' la Canadian "Single Payer"
insurance or Britain's monsterous, red tape-entangled
plan, and they may be proven right in due course.

Some health insurance CEOs flocked to sign
up people for the ACA plans not out of eagerness for
easy and plentiful profits, but because they would have
been dragooned into participation by Washington if
they didn't freely throw in. Now, they have to worry that
the government may simply throw them out, like
yesterday's garbage.

It's time to throw out the ACA, like the garbage that it is!


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