Tag: "health insurance exchange"

One Quarter of Obamacare Enrollees Dropped Out in 2015

people-in-waiting-roomThe administration recently announced 12.7 million people selected or were automatically enrolled in an Obamacare exchange plan at the end of the third open season – February 1. Except for special cases, anyone who missed that deadline cannot enroll in an Obamacare plan for 2016.

That is a few more people than the 11.7 million than at the end of 2015’s open enrollment. However, the administration also announced that only 8.8 million people remained enrolled in Obamacare on December 31, 2015. That is a drop of almost one quarter from the end of 2015 open enrollment.

Obamacare’s Cost per Beneficiary Explodes with Shrinking Enrollment

CBOThe Congressional Budget Office’s latest budget estimate shows Obamacare’s costs per beneficiary have exploded, as enrollment in Obamacare’s broken exchanges collapses. January’s update estimates 2016 exchange enrollment at 13 million people (p. 69).  Although the Administration had previously downgraded its estimate of Obamacare enrollment, this is the first significant change by the non-partisan CBO.

What is really shocking is the January update still estimates tax credits, which subsidize insurers participating in exchanges, will cost taxpayers $56 billion this year (p. 182). That amounts to about $4,308 per enrollee (although not all are subsidized). Back in March 2010, CBO estimated that 21 million people would be covered in exchanges in 2016, for a total cost of $59 billion in tax credits (pp. 20-23). That would amount to about $2,810 per enrollee.

Bleak Future for Obamacare’s “Beneficiaries”

woman-with-child(A version of this Health Alert was published by the Daily Caller.)

One might be forgiven for thinking health insurers are cracking under the strain of Obamacare’s broken insurance exchanges. But don’t be fooled: it is the 10 million Obamacare enrollees who are in trouble, not the insurers.

To be sure, new nonprofit cooperative insurers, set up with special subsidies to compete in the exchanges, have had a terrible run. They deliberately underpriced their premiums to gain market share, expecting the federal government to bail out their losses. Once the Republicans took over the House of Representatives, then the Senate, this became unlikely. As a result, the administration announced in November that 12 of 23 nonprofit cooperative insurers were shutting down.

However, these nonprofit cooperative insurers, which did not exist before Obamacare, are not important overall. That is why UnitedHealth Group’s November 19 announcement that it is losing $500 million on the Obamacare exchanges and might withdraw from Obamacare in 2017 is a big deal. Just a few weeks earlier, UnitedHealth Group had announced it would expand into 11 new states’ Obamacare markets.

Why Does Obamacare Over Invest in Spanish Customer Service?

The Center for Medicare & Medicaid Services (CMS) has started to publish its weekly reports on Obamacare enrollment via the federally facilitated exchanges.

A little over half a million people have selected a plan for the third open season. What is interesting is the exchanges’ overinvestment in Spanish capabilities. We first noted this last January.

The Snapshot reports that the average wait on the phone for a Spanish-speaking customer-service representative is 11 seconds, versus four minutes and 38 seconds for an English speaker. That’s 25 times longer. 52,023 of the 741,112 calls (seven percent) were in Spanish.

Snapshot

Another Day, Another Obamacare COOP Closes

Did the sun come up this morning? That must mean another Obamacare COOP has closed. This time, it is in South Carolina:

CCHP

Colorado Health Insurance COOP Closed

CO COOPLast Friday, Colorado’s Division of Insurance ordered the state’s Obamacare COOP not to offer policies in the state’s Obamacare exchange next year. Obamacare’s COOPs are cascading into collapse quite quickly. NCPA has been studying them since last June, and our research has been prescient.

Obamacare COOPs were specifically stood up by the Affordable Care Act with government loans. They cannot hide their Obamacare losses like larger, incumbent insurers (for which Obamacare exchanges are small parts of their businesses) can.

To show how fast the fall of this COOP has happened, I’ll share three stories:

Peak Obamacare? We’re Almost There

money-burdenThe administration has released a report estimating that enrolment in Obamacare will reach only 9.4 million to 11.4 million at the end of 2016. Back in 2010, when the law was passed, the Congressional Budget Office estimated exchange coverage would be 21 million next year (Table 4).

Why the come down? Obamacare has a miserable take-up rate: Few who do not get significant subsidies sign up. Even worse, many of those who sign up at open enrolment cannot afford the premiums and drop out. Indeed, 15 percent of Obamacare beneficiaries who signed in 2015’s open season (which ended in February) were gone by the end of June. (The New York Times has just published interviews with some struggling to pay their premiums and maintain coverage.)

One year ago, I coined the term “Peak Obamacare” to describe this phenomenon. Although the administration’s cheerleaders have twice celebrated very high Obamacare enrolment during open season, the administration has finally decided to accept reality: We are on the verge of Peak Obamacare.

Obamacare COOPs’ Loans Are “Assets”

My colleague Devon Herrick was prescient about the collapse of Obamacare’s COOPs (nonprofit cooperative insurers set up with government loans to compete unfairly in Obamacare’s exchanges), writing an Issue Brief on the topic last June.

Since, then Obamacare’s COOPs have continued to collapse, stranding almost half a million Obamacare beneficiaries. Chris Jacobs of the Conservative Review has written about the administration’s latest attempt to rescue the remaining COOPs, by rebranding their liabilities as “assets”:

A Symptom; Not the Sickness: Understanding Health Insurance Consolidation

iStock_000007047153XSmall(A version of this Health Alert was submitted as testimony to the U.S. Senate Judiciary Committee.)

Chairman Lee, Ranking Member Klobuchar, thank you for the opportunity to submit this testimony on the impact of mergers in the health insurance industry. The two combinations of greatest concern are Anthem’s announced takeover of Cigna and Aetna’s announced takeover of Humana. Although tis hearing is narrowly focused on antitrust as enforced by the Department of Justice, it is also necessary to understand Obamacare as a cause of this consolidation.

One indicator regulators use to determine whether a business combination will reduce competition is whether there are significant barriers to entry in the industry. If there are, new competitors will not exploit openings created by incumbents’ consolidation. The CEOs of Anthem and Aetna have each (independently) pointed to Oscar, a new health insurer with highly pedigreed investors, as evidence that health insurance is an easy business to enter.

Oscar is indeed an interesting enterprise, which has attracted fawning coverage in the business press both for its innovation and the quality of its investors. Nevertheless, Oscar is a curious start up, because it focuses exclusively on a market – Obamacare exchanges – in which insurers are losing money.

Oscar and The Changing Health Insurance Landscape

Oscar(A version of this Health Alert was published by Forbes.)

Yesterday, the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights held a hearing on “Examining Consolidation in the Health Insurance Industry and Its Impact on Consumers,” at which the CEOs of Anthem and Aetna testified.  Both of these health insurers have announced friendly take-overs of two other insurers, Cigna and Humana.

One indicator regulators use to determine whether a business combination will reduce competition is whether there are significant barriers to entry in the industry. If there are, new competitors will not exploit openings created by incumbents’ consolidation. During the hearing, the CEOs of Anthem and Aetna each (independently) pointed to Oscar, a new health insurer with highly pedigreed investors, as evidence that health insurance is an easy business to enter.

Oscar is indeed an interesting enterprise, which has attracted fawning coverage in the business press both for its innovation and the quality of its investors. Nevertheless, Oscar is a curious start up, because it focuses exclusively on a market – Obamacare exchanges – in which insurers are taking on a lot of pain.