Affordable Care Act Nears Its End

Obamacare, in its present form, is about to run its course. Either Republicans will repeal and replace it or it will collapse under its own weight. Its health insurance markets are on the verge of financial disaster, even before Republicans lay their hands on the law they’ve pledged for seven years to repeal.

The insurance markets are bleeding money. From the get-go, the program has been plagued with too few healthy persons signing up to pay for too many sick persons. Last week, Humana announced it would become the first major insurer to pull out of the market completely next year.  In Tennessee, Humana is the only carrier in 16 counties, and if no insurer fills the void, it would leave nearly 50,000 Obamacare customers with no place for coverage. Aetna CEO Mark Bertolini called it a “death spiral”, predicting plans will leave and creating insurance deserts in swathes of the U.S.  During last year’s campaign, President Bill Clinton called Obamacare “the craziest thing in the world.”

President Trump and Dr. Tom Price, our new Secretary of Health and Human Resources (HHS), have vowed a legislative plan to repeal and replace soon. However, it is uncertain how long it will take to pass, and, moreover, whether it will be enough to keep existing insurers to stick around long enough to transition out of Obamacare’s individually mandated plan into Trump’s free market approach without millions losing their current coverage.  Furthermore, insurers’ main concern is the fate of the subsidies that help low income Americans to afford medical care. But, on a more optimistic note, Blue Cross Blue Shield plans dominate the markets in many states, and thus far those plans aren’t pulling out.

What is meant by the death spiral of Obamacare? Its major element is rising premiums, as they have been for 2017, to make financial ends meet for Obamacare. However, a pool comprised of too many sick people can’t be stabilized at any price. Once you start jacking up premiums to pay for all the pricey health care members are using, you start losing your remaining healthy customers, and the premiums have to be jacked up still further.

Hence, the death spiral will ultimately end up with premiums that no one is willing to pay, or can afford to. In short, the problem is that too few healthy people are buying insurance, and since now the exchange enrollment has begun to shrink, it is obvious the problem isn’t going to get better, but likely it’s going to get worse.

The exchanges have struggled since the inception of Obamacare. There has never been a time when enrollment was booming or insurers were making money in aggregate. In fact, HHS has exerted a regulatory juggling act to make Americans believe that Obama-care was working effectively, when many insurers realized all along that the exchanges were going to die anyway, because no matter what they did, many of these markets simply could not be made profitable.

President Obama was disingenuous with his promises and assurances about Obamacare. Following his lead, Democrats rammed the thing through on a straight party-line vote over the objections of most American voters and Republican lawmakers. Ergo, the mess called Obamacare.

Nevertheless, it has to be fixed. Democrats got no help from Republicans in passing Obamacare, and Republicans will get no help from Democrats in replacing it. However, it’s time for both parties to focus on the health of all Americans instead of scoring political triumphs.

Acknowledgment is given to Megan McArdle’s article “A Rough 24 Hours for Obamacare” in Bloomberg, and Paul Demko’s article “A Bleak Week for Obamacare” in Politico for information in this column.