AHIP is guaranteeing huge premium increases.
And the AHIP warnings reached a crescendo today, after the Obama announcement.
The announcement by President Obama, that there will be a one year reprieve so people can keep their low cost junk insurance, will result in a huge spike in premiums in 2015.
We've been warned.
The young and healthy are the largest cohort holding these junk plans. This is the cohort the insurance industry covets most and is counting on to join the Exchange risk pool in big numbers.
Without the young healthy bodies, the risk pool will be the old and sick. We are now moving into the dangerous situation of adverse selection which will cause the death spiral. Insurers based rates on the assumption that the individual mandate would be implemented, that everyone would be buying, young and old, healthy and sick, so allowing people to keep the junk insurance they already have, even for only one year would invalidate the 2015 premiums that already have been structured.
The collapse of the web site means that all but the most determined enrollees are walking away in disgust. So who is going back repeatedly to attempt to enroll? Who do you think? The sicker and older population. So the Web site's problems are leading to a sicker, older risk pool, with few young and healthy. Makes sense.
Insurers are also opposed for extending open enrollment because that too would impact profits. They have set their 2015 premiums with the understanding that open enrollment would end on March 31st. If open enrollment were to be extended, once again, who would delay enrolling? The young and healthy.
There is no getting around the reality that the US healthcare system rests fully, totally and unequivocally on generating profits for all the Wall Street stakeholders. And because of this, our healthcare system is based on a foundation of sand. It is unsustainable.
Aetna (AET) Chief Executive Mark Bertolini defended his company's participation in ObamaCare public exchanges in 17 states as "a risk worth taking," but worried that technical glitches in the federal government's website would keep younger, healthy people from enrolling.
"The younger healthy people are not going to give (enrollment sites) more than one shot so it could mean adverse selection in 2014," Bertolini said during a conference call Tuesday after the release of the firm's third-quarter results.
The discussion we need to have, which is not happening, is that we have allowed the politicians to entrust our entire health care system to a simply unsustainable notion: that profits for all the players can and must be front and center and the overriding priority. We are seeing this play out in real time before our eyes.
We have the most expensive system in the world, but rank very low in terms of outcomes and mortality and morbidity. Every other industrialized nation regulates to one extent or another, drugs, medical devices, physician fees, hospital costs, but not the United States. And then on top of this, we turn over the entire system to a parasitic industry hell bent on securing profits over the health needs of the nation.
The death spiral, coming to a city near you
New York State which I'm proud to say has more robust consumer protections than the ACA and pure guaranteed issue and community rating, is the classic case of the death spiral.
In New York in the thoroughly broken individual market, everyone pays the same premium for the same health plan. So what's happened? Well it has shrunk to a tiny pool of the sickest people who are paying among the highest premiums in the nation. There are few if any young and healthy. Why would a 26 year old pay the same amount as a 60 year old with heart disease? This is what happens when the risk pool is not properly configured. And I fear this is what we are facing now with Obamacare.
The death spiral is when the risk pool is comprised of an older and sicker population, this is what we, as a nation are facing. What you're seeing unfold with the roll out of the ACA are not garden variety speed bumps. This is the unraveling of the fundamental premise of the Affordable Care Act--a vastly increased risk pool in the utterly broken individual market. It was expected that all the new young and healthy bodies would mitigate the cost, to some extent, of all those desperate Americans the for-profit insurance industry had refused for generations to insure due to pre-existing conditions. But now, it is believed, they will remain with their cheap (not worth the paper its printed on), junk insurance, so the risk pools will be filled with old and sick folks. This is the death spiral writ large.
A word on Micro networks, controlling costs and the new Exchanges
One way insurers are keeping the costs of premiums somewhere within the realm of reasonable (and I use this word with great hesitancy), is by vastly limiting the provider networks. These small networks are being called "micro networks".
Let the buyer beware.
When and if you get on the Exchange and start to browse around, beware of what you're buying. You may think all Unitedhealthcare policies are created equal, but you would be very wrong to think anything like that. Insurers are controlling costs by offering very tightly defined networks of providers, hospitals, etc.
I've noted on the New York Exchange for example, that most, though not all (if you're able to pay a huge monthly premium) networks of doctors and hospitals are very limited and would not allow you to get care at say, Memorial Sloan Kettering or MD Anderson or Mayo, if God forbid you received a cancer diagnosis.
The beginning, middle and end of the functioning of Obamacare is the quality of the risk pool. Unfortunately President Obama gave short or non-existent attention to this major stumbling block this morning. This is the reality when you have a health system based exclusively on profit. Profit needs to be generated, and it's generated by premiums paid and plan design which discourages use of heathcare. High deductibles, co pays and all the out of pocket costs we must absorb, exist to keep a huge financial wall between us and accessing healthcare.
Before anything, the parasitic middleman insurer must deliver profits and earnings to wall Street. The only way this happens is by restricting benefits, with huge deductibles, co-pays and all manner of out of pocket costs--and enrolling young and healthy who will consume little or no healthcare.
Here's what Robert Laszewski, an esteemed health policy analyst has to say about recent events. It's not at all encouraging.
So here's the bottom line.
Healthier people are more likely to stay in the pre-Obamacare plans; they're probably more okay with a bare bones (not worth the paper it's printed on) benefit package. And this will undoubtedly drive up premiums in the new Obamacare markets.
What was announced today is a quick political fix. It will come back to bite Democrats big time ahead of the 2016 elections as premiums skyrocket in 2015.
It's really time for the progressive community to demand in a big and noisy way that the politicians revisit the idea of lowering the age for a Medicare buy in starting at say age 55 for starters.