Many insurance companies are deciding to leave ObamaCare, with Anthem being one of the largest health insurers in the United States determining that will not offer plans through the Affordable Care Act marketplace next year. Anthem joins Aetna, Humana, Minuteman Health, Harken Health Insurance, Molina Healthcare, and many others in what it seems to be an exodus of insurance company fearing the pains of increased costs stemming from the Affordable Care Act.
Why are so many insurance companies deciding to leave, and what are the factors that are contributing to this phenomenon?
The Factors That Come into Play
The Affordable Care Act is massively expensive to keep afloat. Its initial projections significantly overestimated enrollment data, as well as underestimated the cost per beneficiary. This has created a disaster where ObamaCare has become a bottomless money pit. Predictions also overestimated the revenues from various taxes imposed by law. It was projected that $70 billion would stem from Title VIII of the Affordable Care Act, with the CLASS Act being destined to fail even before it gained traction, whose projected revenue was based on accounting that would send private insurers to prison. Even the rhetoric of Medicaid expansion was surprisingly expensive.
Risk Corridor Payments and Statutory commitments. The Risk Corridor was designed to pay out insurers who lost money. However, when insurers made any capital, the Health and Human Services decided to dip into other operating funds to keep what may have looked like a sanctioned commitment. Instead of relieving this need by actually appropriating money from the Risk Corridor aspect of the Affordable Care Act, it was ultimately a bailout of the insurance industry. Now that insurers who relied on these payments just lost revenue altogether to a black hole in the system.
Insurance companies leaving due to high costs set a dangerous precedent. Large firms like Anthem are one of the country’s BlueCross BlueShield companies, which have long represented and serviced the individual market. For Anthem, it has been on the market for more than 70 years. Its exit has left whole regions like Arizona without any insurers.
When will ObamaCare be fixed?