Here it comes, and I cannot believe the Obama team did not expect the meltdown. There is going to be a dramatic pick up in policy cancellations as premiums for “scrap metal” grade, qualified O’Care policies come with strato costs. Healthy young people will stay away in droves, while the sick , the lame and the money-less pour in. Sound like good math to you if you are an insurance company? As small businesses renew policies like Blue Cross, they are going to get crucified in 2014. It’s all baked into the O’Care rancid cake. The insurance companies, of course, know all this and are in a terrific bind. And the Obama crowd knows the O’Care ship is taking on a lot of water. Ships taking on water sink unless the tide is turned. This tide will not turn and the problems will magnify fast as the new year gets under way. Want all the details from a guy who is most often right on the money? Read Michael Boskin’s analysis with care and then ask your Democrat senator what in the world he or she was thinking ramming this beast down the throat of constituents.
The White House is claiming that the Healthcare.gov website is mostly fixed, that the millions of Americans whose health plans were canceled thanks to government rules may be able to keep them for another year, and that in any event these people will get better plans through ObamaCare exchanges. Whatever the truth of these assertions, those who expect better days ahead for the Affordable Care Act are in for a rude awakening. The shocks—economic and political—will get much worse next year and beyond. Here’s why:
The “sticker shock” that many buyers of new, ACA-compliant health plans have experienced—with premiums 30% higher, or more, than their previous coverage—has only begun. The costs borne by individuals will be even more obvious next year as more people start having to pay higher deductibles and copays.
If, as many predict, too few healthy young people sign up for insurance that is overpriced in order to subsidize older, sicker people, the insurance market will unravel in a “death spiral” of ever-higher premiums and fewer signups. The government, through taxpayer-funded “risk corridors,” is on the hook for billions of dollars of potential insurance-company losses. This will be about as politically popular as bank bailouts.
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