The House Ways and Means Committee 2008 timeline for Obamacare rollout pre-ordained a complete failure of the health insurance industry in 2017 and 2018. The mechanism of the economic failure known as the “Death Spiral” can be best described by adverse selection. Expensive sick patients are staying in and healthy customers are bailing out.
In December, Highmark offered my wife and me a plan in which our premiums for the year would be $19,000 with a combined deductible of $15,000. We bailed out to Medi-share for a vastly reduced amount of money. Highmark BCBS is now in full-fledged collapse mode, greatly exacerbated by eliminating their HMO option and forcing people into high deductible PPO plans. Their biggest block of patients, Delaware state workers, is at risk. Their biggest problem is Aetna which is making a move to consolidate complete control of the Delaware health insurance market, (they just displaced Geisinger as the health insurer for the state’s second largest employer, Christiana Care Health Systems). Aetna may actually survive the death spiral by sheer size and being the last man standing, thereby dictating rates.
The most recent instruction from President Trump to the IRS to not require tax filers to tell whether or not they purchased health insurance in 2016 accelerates the pace of the collapse by eliminating the risk of a penalty for healthy people not participating in the insurance pool. The pool of covered lives is therefore populated with sicker people. Mandated insurance coverage which eliminates denial for pre-existing conditions causes a situation where an uninsured person can develop an expensive disease and then immediately gain insurance coverage, of course at a substantial loss to the insurer.
All of this was obviously predictable, as I wrote in 2009, by simply looking at the timeline. 2017 and 2018 were baked in 8 years ago. Looking forward, the most optimistic chance for stabilization of the chaotic and insolvent market can only begin in 2019. By that time, the temporary federal Medicaid subsidy to Delaware will be gone and Delaware’s budget will not be able to be balanced. Between the loss of free market health insurance competition, the burgeoning cost of Medicaid, and the cost of providing health insurance to Delaware state workers and pensioners, the budget will be busted.
C.D Casscells, MD
Caesar Rodney Institute