Wednesday, November 25, 2015
Published: November 24, 2015
LIKE Peter Pan, the Affordable Care Act may never grow old. The program is perhaps even more unsustainable than we thought. The same White House assuring us that Syrian refugees will be thoroughly vetted failed to thoroughly vet is own health care plan.
Obamacare is a ticking time bomb. Or, to put in the “Peter Pan” vernacular, it's a ticking crocodile. Its sustainability is chasing it toward a fiscal gangplank.
Further evidence that Obamacare is based on Tinker Bell-style pixie dust rather than solid business principles came last week. UnitedHealth Group, the largest U.S. health insurer, said it can't commit to participating in the program beyond the coming year.
Why? It's unsustainable. There's that word again, the one that Barack Obama and his friends in Congress can't stand to utter. One such Lost Boy, California U.S. Rep. Xavier Becerra, said any problems with Obamacare amount to mere growing pains. Like any new enterprise, Becerra said, “it will have growth and spurts.”
Ending the program seems the best option, but this will never happen on Obama's watch. What will happen — what's already happening — are huge increases in
premiums and declines in the number of risk firms willing to stay in this Neverland.
Think of Obamacare as a one-legged stool, held up only by empty promises and deferred reality checks.
UnitedHealth CEO Stephen J. Hemsley said that as of now the company isn't willing to continue with Obamacare past Dec. 31, 2016. “We can't sustain these losses,” Helmsley said. “We can't subsidize a market that doesn't appear at this point to be sustaining itself.”
No worries, Democrats counter. Things will work out. Yeah, just the way that keeping your own doctor thing worked out. We were promised a system with multiple choices, a veritable Eden of a marketplace. It's turning into a swamp.
Sustainability is based on almost universal participation, especially by younger people who pay the freight but don't run up medical bills. But the higher the premium, the more those younger people will avoid signing up — even if it means paying the health law's tax (none dare call it a “penalty”).
So Obamacare is caught in a vicious cycle of not enough participants, too many claims, too much risk for insurers and too-high premiums, which lead to even fewer participants. Some participants are cherry-picking the program, gaming the system. They sign up when they need expensive treatments, then drop out when they get well.
Again, critics could see that coming. A number of regulated marketplace providers are losing money on Obamacare. Arrgh, says the Bernie Sanders crowd. If only CEOs such as Hemsley didn't make so much money.
Hemsley does make a lot. His salary and bonuses hit $3.3 million. By comparison, United is losing $700 million this year on Obamacare.
Obama was unwilling to chart a gradual, bipartisan course that would reduce the number of uninsured in a sustainable fashion. Republicans critical of the plan were cast as pirates intent on keeping the poor in uninsured penury. Now those same Republicans are encountering Obama's wrath over the Syrian refugees. Again, though, some caution is in order.
Health care marketplace choices aren't growing. They're shrinking. Premiums aren't stabilizing. They're growing. It was all quite predictable.
“If you cannot teach me to fly,” J.M. Barrie wrote in “Peter Pan,” “teach me to sing.” For UnitedHealth Group and other insurers, the line of the day is, “If you cannot make money under the ACA, make for the exits!”