Obamacare has failed the American people, and things are only getting worse by the day:
- Even higher premiums. People who have signed up for the benchmark Obamacare plan will pay, on average, 25 percent more in premiums next year. That is more than three times the increase for 2016. On top of all that, the quality of the coverage is worse than expected. Americans are, in effect, paying more for less than what they were promised.
- Even higher deductibles. On one of the least expensive types of plans, deductibles for both individuals and families are going up by about 15 percent. Deductibles have gotten so high that it is essentially the equivalent of not even having health insurance.
- An even bigger bill for taxpayers. Because premiums have skyrocketed so much, so have the subsidies needed to prop up Obamacare. According to one independent study, taxpayers will pay nearly $10 billion more for subsidies in 2017.
- Even fewer choices. For 2016, only 2 percent of eligible customers had one insurer to choose from. For next year, that number has jumped to 17 percent.
All of these trends are heading in the wrong direction. The trajectory we are on points to the likely possibility that Obamacare is already in what experts call a “death spiral,” where there is such little competition that costs skyrocket and the market collapses. Here's what Doug Badger of the Galen Institute wrote earlier this month:
- “Obamacare already is in a death spiral that is fast approaching its terminal point. That is because, despite billions in individual and corporate subsidies, insurers are bleeding money. … And 2015 will be remembered as Obamacare’s good old days. Since then, four of the country’s five largest insurers — Aetna, Humana, Cigna and UnitedHealthcare — have all but abandoned the exchanges. The fifth, Anthem, saw its stock price spike upwards last month minutes after its CEO told investors that his company might pull out in 2018. ... The insurer exodus has left more than one in five Americans with an exchange in which only one company participates. The consequences of dumping all the bad risks onto a single insurer are entirely predictable — that insurer will drop out of the market, leaving no insurers in the exchange. The program’s death spiral is irreversible.”
The very real possibility of a death spiral picked up last spring, when insurers warned that their losses from Obamacare were “unsustainable.” The Hill reported on April 15:
- “Insurers say they are losing money on their ObamaCare plans at a rapid rate, and some have begun to talk about dropping out of the marketplaces altogether. … While analysts expect the market to stabilize once premiums rise and more young, healthy people sign up, some observers have not ruled out the possibility of a collapse of the market, known in insurance parlance as a ‘death spiral.’”
Sure enough, as the summer unfolded and premium increases piled up, the death spiral began to take shape:
- “Obamacare ripples through Texas as health insurers propose steep rate hikes. … ‘The individual market is a market of last resort ... And that's not how it used to be,’ said Janna Hamstra, a benefits consultant in San Antonio whose firm, Hamstra Benefit Solutions, advises employers across Texas. ‘In our industry, they call it the death spiral ... As those premiums keep escalating, healthier individuals decide to self insure,’ she said.” (Houston Chronicle)
- “[Princeton University health economist Uwe Reinhardt] offers an especially thoughtful explanation of why he believes the Obamacare marketplaces won’t work. ‘Liberals think this will settle itself. Eventually, though, we all know about the death spiral that actuaries worry about, and I think what you’re seeing now is a mild version of that. These things accelerate, as premiums keep rising.’” (Vox)
- “‘I think what we should be expecting is premiums that are substantially higher, and I think there’s a real risk that other insurers pull out,’ said Michael Morrisey, a professor at the Texas A&M University School of Public Health. ‘We may be beginning to see the death spiral of insurance plans in the exchanges.’” (Texas Tribune)
- “Jeffrey Anderson, a senior fellow at the conservative Hudson Institute, said that the problem is that there is a high likelihood that no young people will ever sign up for Obamacare. ‘There are too many loopholes, too many ways to get around paying if you don't get insurance,’ Anderson told Business Insider. For this reason, Anderson does not believe that Obamacare will ever work and shows it is in a ‘slow-motion death spiral.’” (Business Insider)
- “‘That’s going to be the future,’ said Roger Stark of the Washington Policy Center in Washington State. ‘What we’re seeing here is the beginning of a death spiral as far as exchanges are concerned as more companies pull out.’” (Fox News)
- “Democratic lawmakers pushing 'public option' amid ObamaCare woes. … ‘I think we're seeing the public option come back out of desperation,’ said Douglas Holtz-Eakin, president of the conservative American Action Forum. ‘We’ve seen UnitedHealthcare groups, the Aetnas of the world withdraw from exchanges. … As a result, the kinds of people buying insurance there have very expensive medical bills -- insurers are losing money, as they try to cover those bills, jacking up the premiums, people move to other policies so it’s turning into the death spiral that everybody worried about,’ said Holtz-Eakin.” (Fox News)
Indeed, even Democrats knew Obamacare was unraveling, and began plotting to impose government-run health care. Now they are digging in to defend the status quo.
But the answer isn’t to ignore the problem. The situation is too dire. The time to act is now.
This is the third piece in an ongoing series.
Part 1: Repeal Is Relief
Part 2: ObamaCare Has Failed