When it comes to Obamacare and low enrollment numbers, no amount of cajoling, bribery, or punishment can make people buy a lousy product, writes the Cato Institute’s Michael Tanner. Not helping the enrollment numbers is that a number of bugs have surfaced at healthcare.gov. According to the NYT, “officials and insurers are finding that the solution to one problem may create new problems.”
Furthermore, health-care co-ops are failing across the country. In Oregon, Colorado, Tennessee, and Kentucky, co-ops have announced that they will be “winding down operations because of lower-than-expected enrollment and solvency concerns.” As Mr. Tanner notes, “If you like your plan, you can keep it” is not going to be much comfort to the hundreds of thousands of people who will lose their insurance plans.
Another looming problem is that medical loss ratios (MLRs) are threatening the viability of insurers in as many as 27 states.
Medical loss ratios (MLRs) represent the proportion of the premiums collected by an insurer that are paid out in benefits.
The young and healthy simply haven’t signed up for Obamacare in the same numbers as those who are older and sicker. The only way for insurers to offset their skyrocketing MLRs is to hike premiums still further. The researchers suggest that premiums in the worst states could have to rise by an average of 34 percent, and possibly as much as 52 percent. But premium hikes of that magnitude would almost certainly further discourage younger and healthier Americans from buying insurance.
In Massachusetts, the home of Romneycare, the MLR reached 121 percent of premiums. Insurers obviously cannot stay in business for long if they pay more in benefits than they collect in premiums. Losing money on the products you sell is not a good business model.
Read more here from Michael Tanner, who explains why it is going to become “harder and harder to keep calling it the Affordable Care Act.”