The ObamaCare Bubble


This week’s health policy news roundup curated by Jane M. Orient, M.D.

Since the 2010 passage of the Patient Protection and Affordable Care Act (ACA or ObamaCare), the health care industry has seen record growth and increased revenues, writes Bryan Rotella. But is it a bubble? As Christian Bale’s character said in the movie The Big Short, “No one can see a bubble. That’s what makes it a bubble.” Few investors saw the signs pointing to the mortgage market collapse.

We have done nothing to improve the outcomes of the 10% of the population that drives 80% of our claims costs, but millions of previously uninsurable people are flooding the exchanges. What will happen when the government stops pumping billions of dollars into the exchanges? While Hillary Clinton touts a renewed push for a government funded “public option,” this looks a lot like the government bailout of the mortgage banks.

The next President could face an ObamaCare meltdown in the very first month if more insurers pull out.

Nevertheless, ObamaCare’s proponents, especially Obama himself, insist it is going quite well. Obama insists that the only thing needed to fix it is the “public option,” which congressional Democrats said was unworkable before ACA passed. John Graham writes: “If Hillary Clinton were able to institute a public option, I anticipate it would accelerate insurers’ exit from Obamacare exchanges, making it unlikely that exchanges would ever become profitable.”

While insurance companies claim otherwise, CMS insists that the risk pool is improving. “The CMS report, alas, has a glaring credibility problem: Nobody can verify either the methodology or the data the agency used,” writes Doug Badger. CMS makes an “adjustment” for cross-year claims, but even CMS can’t “adjust reality.”

Premium increases people will experience on average in 2017 “will likely fall between the 9% that often requires them to switch plans and lose any continuity of care and the 23% average increase now being sought,” writes Seth Chandler. Instead of admitting to errors, however, ObamaCare proponents are becoming addicted to “transparently bogus statistical methodologies said by some to emanate from another planet. We see a delusion that this is all some sort of teething problem.” He concludes that “it is time to admit that the existing Obamacare spaceship is passing the event horizon of the adverse selection black hole. Another quest for the unicorn of community rated health insurance has failed.”

The ugly details of the ObamaCare death spiral are explained by John Goodman: “A study by Avalere predicts that next year more than one-third of the exchanges will have only one insurer left. More than half the exchanges will have two insurers, at most. We were promised competition. What we are getting instead is monopoly, at best duopoly.” Moreover, as premiums soar, choice of doctors and hospitals dwindles. “The Blue Cross offering in Dallas originally looked like a high grade employer plan. But like two thirds of the plans nationwide, the insurer has now switched to HMO coverage only.”

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