Home » Insurance » The Creation of Obamacare’s Individual Market Mess

The Creation of Obamacare’s Individual Market Mess

August 2nd, 2017 Insurance

It has been four years since insurers submitted their initial rates to buy market share in Obamacare’s individual market. Back then insurers were using assumptions that the segment would grow through government forcing people to purchase their product, existing policyholders coming over from “crappy” insurance plans, the promise of enforcing the rules, huge transfers of funds from competitors, and large sums from taxpayer funded subsidies.

Nevermind the ginormous turd of a website, the bigger problems occurred when those in power issued major changes – literally weeks into the first open enrollment. Some problems have continued because of a lack of enforcement. Others have come from bipartisan Congressional changes that were signed by President Obama.

The first was a reprieve for those already insured who found out that “if they liked their plan” they couldn’t keep it. These transitional plans (Grandmothered) kept a large number of healthy folks out of the Obamacare markets when HHS issued a rule allowing people to retain their medically underwritten insurance.

The second problem was the expansion of – but no policing of – “hardship waivers”. There are a plethora of waivers people can take advantage of. Some are legit. Others, not-so-much. The most egregious (IMO) is the exemption for Christian Health Care Sharing Ministries (HCSM). HCSM’s aren’t insurance products. They don’t have mandated benefits nor do these Ministries pay in to the Obamacare taxes and fees. Don’t get me wrong, if it’s the right fit for a person they should look at it as an alternative. My objection is the double standard that Obamacare considers this “good” but a mini-med/limited benefit plan is considered crap.

Lack of enforcement continues to be a significant contributor. The primary culprit on the enforcement front stems from Special Enrollment Periods (SEP). While these have been tightened under the Trump Administration, the first three years under Obama was a free-for-all. In discussions with insurance company underwriters and executives, all had a similar response to how HHS policed SEP’s. The short answer was, they didn’t. As one insurer put it:

“They (Obama’s HHS) rubber stamped everything. Politically they had to. Think of it this way. If someone was without insurance in January then was diagnosed with cancer in March they would have to wait until January of the following year to obtain coverage. These type of situations happen more often than you know. Imagine the backlash if people were diagnosed with major health conditions then were denied insurance due to Obamacare’s own rules? The simple way to make it work was to allow people in, then place blame on insurers when rates went up.”

A final problem is revenues. “Not one dime to the deficit” was BS. When you have an initial CBO score that uses 10 years of revenues but only 6 years of expenses and it barely is at breakeven we know it won’t be true. Making matters worse, the expenses continue to exceeded expectations. The bending of the cost curve is going in the wrong direction. Instead of shoring up the costly overruns Congress does the opposite – cuts revenues. Look at this list of changes to Obamacare that are causing the fiscal crisis to rise:

Every one of these revenue cuts had bipartisan support.

There are lots of nails in the coffin of the individual health insurance market. Many come from the sledgehammers that Obama’s administration pounded. Some have come from a Republican controlled Congress.

Both sides continue to point fingers. Which brings me to something I was told as a young child. When you point a finger at someone remember that three fingers are pointing at you.

>>Insurance Books (Completed)


Related Post to The Creation of Obamacare’s Individual Market Mess

Health Wonk Review: Life’s a Beach edition

May 22, 2014
Good morning, and welcome to this edition of the Health Wonk Review. In casting about for a theme suitable to the occasion, my mind wandered a bit (as it’s prone to do this time...

But mostly losers…

January 2, 2014
This morning, Nate posted about “happy ObamaCare enrollee … Allena Ruszkiewicz,” who was able to procure a shiny new plan to cover her GHB the date rape drug narcolepsy med Xylem. While that’s good...

The problem with free Insurance

April 29, 2013
This doesn’t apply just to insurance but when you offer someone an unlimited amount of something for free they are very likely to find uses in ways you never intended. For example, if I...

Split Personality

April 13, 2014
The creators of Obamacare envisioned a massive overhaul of the U.S. health care system that would insure millions. Noble idea, long on grand intentions, short on effectiveness. Liz Linton feels stuck in health insurance...

Buy-Sell: The Video

July 5, 2017
We’ve discussed buy-sell agreements before (here, for example. And here), but recently Illinois Mutual posted a really helpful video explaining how they work, and why they’re so important: Original content copyright © InsureBlog >>Insurance...

Dabney Coleman gets…

February 25, 2014
The last laugh: Original content copyright © InsureBlog >>Insurance Books (Completed)...