People insured under Obamacare fall into 2 categories – those covered by Medicaid and those in the insurance “pools”. Medicaid, like Social Security, is financially unsustainable in its present form. The reason the other half of the equation – the state run pools – is in a death spiral was neatly explained in a recent WSJ article by Michael Cannon (“How ObamaCare Punishes the Sick”), the main culprit being the ban on discrimination against patients with pre-existing conditions. The example he used is treatment for multiple sclerosis, but is true for other expensive conditions such as rheumatoid arthritis, infertility, etc.
An MS patient might file $61,000 in claims. “Obamacare’s rules let MS patients buy coverage for far less, forcing insurers to take a loss on every MS patient” creating “an incentive to avoid enrolling people in worse health by making policies ‘unattractive to people with expensive health conditions.” With Obamacare subsidies they “still receive just “47,000 per MS patient – a $14,000 loss per patient.” That means whichever company offers the best MS coverage gets the most customers and, consequently, the most losses, triggering a “race to the bottom.” Health Insurers, wisely, are abandoning the sinking ship.
Those companies still offering policies are slashing coverage, their patients facing “higher cost sharing (even for inexpensive drugs) more prior-authorization requirements, more mandatory substitutions and, often, no coverage for the drugs they need, narrow networks that exclude leading cancer centers, inaccurate provider directories and higher deductibles.
All in all, Obamacare is meeting expectations – that is the expectation that it would collapse. No serious institution, government or private, believed it would survive as designed. Like a house with severe structural damage from an earthquake, it can’t be “fixed.” It must be torn down and rebuilt.