Nov 20, 2015

HHS Already Considering Bailing Out Insurance Companies

Post by Derek Yale

Arlington, VA — In an attempt to quell the rapidly growing unease in the insurance industry over the sustainability of Obamacare, President Obama’s Department of Health and Human Services is declaring taxpayers should pay up in order to bail out big insurance companies.

“In the event of a shortfall for the 2016 program year, [HHS] will explore other sources of funding for risk corridors payments, subject to the availability of appropriations,” an HHS memo from Thursday evening reads.

HHS’ actions come on the heels of UnitedHealthcare’s announcement yesterday that in light of the wide array of recent Affordable Care Act failures, including skyrocketing health care premiums and failed CO-OPs, they’re considering backing out of the Obamacare exchanges in 2017 to avoid further losses. Many report that the announcement is sending ripples through the insurance industry.

Freedom Partners Senior Policy Advisor Nathan Nascimento issued the following statement: 

“We already knew that this Administration has no problem with putting special interests ahead of Americans’ health care – but yet another bailout for insurance companies on the backs of taxpayers only throws more good money after bad. Washington’s flawed one-size-fits-all approach to health care has failed, leading to plan cancellations, skyrocketing premium and out-of-pocket costs, and instability for American families and business. The solution is to get government out of the way – not dig the hole even deeper.”

United, Other Insurance Companies Deeply Troubled By Obamacare Shortfalls

CNBC: “‘Big’ Bad Day For Obamacare As UnitedHealth Considers Exit.” “On Thursday, [Obamacare] got a very loud warning shot across its bow. Leading insurance company UnitedHealth said on Thursday that it expects to take big losses on its Obamacare health plans, and it’s pulling back on marketing 2016 plans. The insurer revealed it may exit the exchanges that sell those plans in 2017 because of fears that it won’t be able to make money.” (Dan Mangan, “‘Big’ bad day for Obamacare as UnitedHealth considers exit,” CNBC, 11/19/15)

The Hill: “Shockwaves” Sent Through Industry After United Announcement. “UnitedHealthcare’s warning sent new shockwaves across the healthcare sector after weeks of mounting anxiety among private insurers whose participation in the exchanges is critical to the viability of the president’s signature law.” (Sarah Ferris, “New ObamaCare angst as top insurer threatens to bail,” The Hill, 11/20/15)

United Announcement “Underscores Financial Challenges Facing Insurers.” “Obamacare observers said that UnitedHealth’s announcement underscores financial challenges facing insurers that sell coverage on Affordable Care Act marketplaces, challenges that could lead to less choice and higher prices for exchange customers if UnitedHealth bolts the exchanges, and if other insurers follow suit.” (Dan Mangan, “‘Big’ bad day for Obamacare as UnitedHealth considers exit,” CNBC, 11/19/15)

United Healthcare CEO: “We Cannot Sustain These Losses.” “’We cannot sustain these losses,’ said UnitedHealth Chief Executive Stephen Hemsley. ‘We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.’” (Caroline Humor, “UnitedHealth may exit Obamacare individual exchanges,” Reuters, 11/19/15)

Systemic ACA Failures Can No Longer Be Ignored

United’s Announcement “Came Amid A Spate Of Tough News For Obamacare.” “[ACA failures have] included the planned shuttering of what will be more than half of the new co-ops created to sell insurance on the exchanges, the government’s announcement that insurers will receive just a small fraction of the money they could have expected under a financial risk protection program, and stories detailing how rising premium prices and deductibles are causing consumers to question whether to buy exchange-sold plans.” (Dan Mangan, “‘Big’ bad day for Obamacare as UnitedHealth considers exit,” CNBC, 11/19/15)

Wall Street Journal: “Health Insurance Companies Seek Big Rate Increases For 2016.” “Several regulators around the country…have approved all or most of the big premium increases sought by the largest health plans in their states for the new sign-up season that begins Nov. 1.” (Louise Radnofsky and Stephanie Armour “Insurers Win Big Health-Rate Increases,” Wall Street Journal, 8/27/15)

New York Times: “In Many Obamacare Markets, [Health Care Plan] Renewal Is Not An Option.” “There are 499 markets for Obamacare plans in the United States. In 89 of them, the insurance company that offered this year’s best deal in the ‘silver’ category will not be returning for 2016….Most of those exits are a result of insurance co-op plans that failed. A few exits came as insurers that are still operating elsewhere decided to leave particular markets. People in these canceled plans can’t simply renew their current policy if they like it — they have to go back into the marketplace and find a new insurer.” (Amanda Cox and Margot Sanger-Katz, “In Many Obamacare Markets, Renewal Is Not An Option,” The New York Times, 11/18/15)

Gallup: “Americans Tilt More Negative Toward Affordable Care Act.” “A slight majority of Americans (52%) say they disapprove of 2010 healthcare law known as the Affordable Care Act or ‘Obamacare.’ Disapproval of the law, which has generated public opposition from its outset, is up four percentage points since July.” (Andrew Dugan, “Americans Tilt More Negative Toward Affordable Care Act,” Gallup, 11/13/15)

HHS Assures Insurance Companies: Don’t Worry, We’ll Bail You Out

HHS Memo: We’ll “Explore…Other Sources Of Funding.” “In the event of a shortfall for the 2016 program year, the Department of Health and Human Services (HHS) will explore other sources of funding for risk corridors payments, subject to the availability of appropriations. This includes working with Congress on the necessary funding for outstanding risk corridors payments.” (Center for Consumer Information & Insurance Oversight (CCIIO) and Centers for Medicare & Medicaid Services (CMS), “Risk Corridors Payments for the 2014 Benefit Year,” Department of Health and Human Services, 11/19/15)

Obama Administration Continues To Insist The Law Is Working (Despite All Evidence Otherwise)

HHS Official: Marketplace Is “Stable,” Consumers Have “Choices.” “‘This year, people looking for coverage in the marketplace continue to have a robust number of plan choices and as the data shows the marketplace is stable, vibrant and a growing source of coverage for new consumers. Today’s statement by one issuer is not indicative of the marketplace’s strength and viability,” [said Ben Wakana, a spokesman for the U.S. Health and Human Services Department].” (Dan Mangan, “‘Big’ bad day for Obamacare as UnitedHealth considers exit,” CNBC, 11/19/15)

Expert: “The Obamacare Business Model Doesn’t Work.” “‘The Obamacare business model doesn’t work,’ said Robert Laszewski, president of consultancy Health Policy and Strategy Associates in Virginia. ‘Obamacare has got to be retooled.’ Laszewski cited the fact that insurers overall still are losing money selling exchange plans in the second year of Obamacare, and that as a result many of them are raising prices, which could in turn lead to current and prospective customers taking a pass on further coverage.” (Dan Mangan, “‘Big’ bad day for Obamacare as UnitedHealth considers exit,” CNBC, 11/19/15)

“These People Are In Denial.” “‘The pro-Obamacare people, including the administration and all of the supporters, have really talked themselves into the notion that Obamacare is well-designed and it’s working,’ Laszewski said. ‘These people are in denial.’” (Dan Mangan, “‘Big’ bad day for Obamacare as UnitedHealth considers exit,” CNBC, 11/19/15)

AHIP CEO Marilyn Tavenner: We’ve Been Clear With POTUS About These Challenges. “‘We’ve been very clear with the Administration about the serious challenges facing consumers and health plans in this exchange market,’ Marilyn Tavenner, the CEO of the powerful insurer group America’s Health Insurer Plans, wrote in a statement.” (Sarah Ferris, “New ObamaCare angst as top insurer threatens to bail,” The Hill, 11/20/15)

American Health Insurance Plans (AHIP) Official: “Tremendous Uncertainty, Tremendous Instability” With Obamacare. “Clare Krusing, spokeswoman for the industry group America’s Health Insurance Plans, said that UnitedHealth’s comments Thursday reflect what members of AHIP have been experiencing themselves in recent months with their exchange products. ‘This has been a very challenging market; it’s still a market in transition,’ said Krusing.” (Dan Mangan, “‘Big’ bad day for Obamacare as UnitedHealth considers exit,” CNBC,  11/19/15)

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