Obamacare in need of surgery, STAT!

Insurers are bailing out, premiums and penalties are rising and unpopularity is growing. The law must be reformed.

News stories of recent days suggest a stabbing pain in the wallet awaiting people who buy health coverage for 2017 through Obamacare exchanges. Insurers in many states will seek major premium hikes.

All of which contrasts with President Barack Obama’s victory lap in late March, when he celebrated the sixth anniversary of his signature achievement and crowed about its rousing success.

His verdict looks increasingly dubious.

And looming rate increases aren’t the only signs of severe stress. Each week brings new evidence that Obamacare is due for more than a checkup; it needs life-saving surgery. On April 19, UnitedHealthcare, the nation’s biggest insurer, said it would stop offering coverage in many states next year because of heavy losses. The company had expanded coverage to 34 states, but now it says it can’t afford to cover hundreds of thousands of people in most of those states.

United isn’t alone in hemorrhaging. Insurers lost at least $3 billion selling individual plans in 2014, according to researcher Brian Blase, with the Spending and Budget Initiative at the Mercatus Center of George Mason University.

No wonder other insurers warn that they may follow UnitedHealthcare to the exit, unless they win major premium rate hikes for next year. How high will they go? Here’s a clue: Insurers received $7 billion in a federal subsidy program in 2014. That program expires at the end of this year. Blase and his colleagues estimate premiums would have had to be 26 percent higher in 2014 without that subsidy.

Other options to balance premiums and medical costs: Insurers can raise deductibles, narrow their networks of hospitals and doctors, or find other ways to cut costs.

As costs rise, Americans turn increasingly sour on the law. Some 54 percent now disapprove of Obamacare, up from 49 percent in July, according to a survey the Pew Research Center released last week.

Obamacare is lagging on many fronts:
• Far fewer people have signed up for private coverage this year than the 20-plus million that the Congressional Budget Office and other experts projected when Congress passed the law in 2010.
• Insurers are losing money because the people buying polices are older and sicker — therefore more expensive to cover — than experts projected.
• Obamacare policies are disproportionately attracting the poor, who benefit most from federal subsidies that help pay premiums. That’s good for those who get coverage, but the lack of better-off purchasers limits the premium money rolling in to pay medical expenses.
• Penalties are rising for going without health insurance — the greater of $695 or 2.5 percent of taxable household income for 2016. But that hasn’t sold many middle-income Americans that Obamacare policies — with narrowing networks of doctors and hospitals — are worth the increasingly steep cost.
• Many of those who did sign up didn’t pay their premiums or were bounced out of coverage because they weren’t eligible (because, for example, they were undocumented immigrants), Blase reports. In February 2015, 11.67 million people had selected a plan from Obamacare exchanges. By the end of the year, though, only 8.78 million remained. The rest never paid, stopped paying or were unable to verify their eligibility for coverage, according to his analysis.
• Absent an influx of young, healthier people to offset costs, insurers will have to keep raising rates, narrowing provider networks or hiking deductibles and copays. That, in turn, will chase away even more of the people insurers hope to attract. Many healthy people balk at high premiums and deductibles for coverage, especially when the rules have been lax enough to allow them to claim coverage when they get sick — and to drop it when they get well. (The feds say they are trying to close that major loophole. We’ll see.)
• Lower-cost choices are drying up. Twelve of 23 state co-ops created under Obamacare to stoke price competition have collapsed. In part, that’s because Congress didn’t deliver enough federal funds to keep co-ops afloat when costs overran revenue.

In the heart of the 2016 campaign season, there’s no impetus for the White House to reopen the law, especially since many Republicans have voted — and vowed — to repeal it. And come January, a president who tries to scrap the law will face sharp opposition from millions of people grateful to now have coverage.

But as insurers raise rates and restrict coverage, the guarantee of access to insurance becomes an expensive, empty promise for millions.

“Obamacare is not about the insurance companies,” insurance analyst and blogger Robert Laszewski notes. “It is about the consumers that have nowhere else to purchase individual health insurance in the United States and are already finding the offerings — with subsidies or without — lousy deals.”

The lousier the deals, the more pressure on Congress to overhaul the law to allow insurers more leeway to tailor their offerings (and prices) to fit the varying needs of people in the market. …

A new president and a new Congress can’t ignore Obamacare’s faltering health. Prep the OR.
— CHICAGO TRIBUNE