Obamacare

The Return of the Obamacare Death Spiral

The health law falters as yet another major insurer pulls back from the exchanges.

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Whitehouse.gov

Earlier this week, Aetna, which covers about 900,000 people through the health exchanges created under Obamacare, announced that it would dramatically reduce its presence those exchanges. Instead of expanding into five new states this year, as the insurer had previously planned, the company said that it would drop out of 11 of the 15 states in which it currently sells under the law.

Aetna's decision follows similar moves from other insurers: UnitedHealth announced in April that it would cease selling plans on most exchanges. Shortly after, Humana pulled out of two states, Virginia and Alabama. More than a dozen of the nonprofit health insurance cooperatives set up under the law—health insurance carriers created using government-back loans in order to spur competition—have failed entirely. While some insurers are entering the exchanges, even more are leaving.

What this means is that in several states, and even more counties, there will be only one insurer available through Obamacare. In at least one county—Pinal County, Arizona—it is likely that there will be no insurer available on the exchange at all.

This slow exodus of insurers from the health law's marketplaces represents a serious threat to the continued stability and existence of its exchanges. Obamacare is perched on the edge of a death spiral.

The fundamental problem is simple: Insurers are losing money. Earlier this year, Aetna said it expected to lose about $300 million on the plans. UnitedHealth estimated losses on exchange plans in the range of $650 million. This is not a problem that is limited to big, profit-seeking insurance companies: The majority of the non-profit co-op plans created under the law have failed, citing an inability to pay claims using premium revenues.

This is simple business math. For insurers to operate on the exchanges, they have to bring in sufficient revenue to cover their claims. Some of them might be willing to accept losses up front on the promise of returns over time. But the losses can't go on forever.

And what the insurers who have left the program have made clear is that they believe that, absent changes, the losses will go on forever. "The vast majority of payers have experienced continued financial stress within their individual public exchange business," Aetna CEO Mark Bertolini said about the decision. In a call with investors last year, a representative from UnitedHealth said the company "saw no indication of anything actually improving" inside the exchanges. "We cannot sustain these losses," UnitedHealth CEO Stephen Hemsley said on that call. "We can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself."

Partisan defenders of the law have sometimes argued that Republicans in Congress crippled it by making it more difficult for the federal government to subsidize struggling insurers. At a minimum, they are overstating their case.

This is a reference to a provision inserted into a 2014 spending bill limiting the ability of the administration to dip into Treasury funds to pay out funds under the law's risk corridors provision. The risk corridors provision was essentially a backstop built into the health law to help insurers balance out profits and losses during the first years of the program. Insurers whose claims came in lower than expected would make payments into the government-run program, while those whose claims came in higher than expected would receive payments.

In theory, the payments even out, with some insurers paying in and others being paid out. That was certainly the expectation when the bill was passed: The Congressional Budget Office (CBO) scored the provision as revenue neutral—costing taxpayers nothing.

But what would happen if claims from all the insurers came in higher than expected? The answer is that there was no plan for this possibility. In addition to the CBO's score, which while imperfect set expectations for the law, the Department of Health and Human Services did not provide for any source of funding should outgoing payments exceed collections.

So what Republicans did was to require the law to work as projected and as expected—and limit the administration's options to prop it up, at taxpayer expense, should things not go as planned.

As the cascade of insurance carriers exiting the Obamacare marketplaces makes clear, things are not going as planned.

In Aetna's case specifically, there is an additional complication: The company has proposed a merger with competing health insurance company Humana, but the Obama administration has blocked the move, with Aetna and the Department of Justice set to hash out the details on court later this year. In July, before the DoJ announced plans to oppose the merger, Aetna CEO Mark Berscolini sent a letter to the Obama administration stating that if the administration decided to block the merger, Aetna would respond by reducing its exchange business.

"If the deal were challenged and/or blocked," the letter, which was first published by The Huffington Post, says, "we would need to take immediate actions to mitigate public exchange and ACA small group losses," specifically by reducing the company's exchange presence to just 10 states. The letter suggests that a complete exit from the exchanges could be in the works if the merger is not allowed, saying that "it is very likely that we would need to leave the public exchange business entirely and plan for additional business efficiencies should our deal ultimately be blocked."

It's entirely reasonable to view Aetna's move, then, as the execution of a threat in a business negotiation with federal regulators. (It's also worth noting that the Department of Justice requested the letter from Aetna, which turned out to be a rather convenient document to have for making a public case against the insurer.)

At the same time, the core issue remains the same: Selling insurance on Obamacare's exchanges is not a good business proposition in many instances. Aetna was losing money in a way that was not, by itself, sustainable. Aetna was willing to incur losses on the exchanges—but only if allowed to expand its business in other ways. If Aetna was not incurring losses on Obamacare's exchanges, this would not be an issue.

And it is because of those losses that we are seeing what looks more than a little like the start of a health insurance death spiral in the exchanges. This is far from certain, and will depend in significant part on the results of the next open enrollment period, which starts later this year, as well as the decisions made by other health insurers under the law. But there are a number of warning signals to be watching.

We know what a health insurance death spiral looks like because we've seen them before, in states such as New York, New Jersey, and Washington. The experience in those states varied somewhat, but they all shared several essential qualities: The states put in place regulations requiring health insurers to sell to all comers (guaranteed issue), and strictly limiting the ways that insurance could be priced based on individual health history such as preexisting conditions (community rating). As a result, insurers ended up with large numbers of very sick customers who were very expensive to cover. Because they were subject to limits on how they could price health history, they responded by signficantly raising premiums for everyone. The new, higher premiums caused the healthiest, most price sensitive people to drop coverage entirely, which caused insurers to raise premiums further, resulting in yet more individuals dropping coverage, and so on and so forth, until all that remained was very small group of very sick, very expensive individuals.

Washington state's experience in the 1990s is particularly instructive: After the state put in place guaranteed issue and community rating rules, carriers saw an influx of unusually sick and expensive beneficiaries, as well as individuals gaming the system by signing up for coverage in advance of an expensive medical event, then cancelling as soon as that event was over. Insurers simply couldn't make money in the individual market, and so between 1993 and 1998, 17 of the state's 19 plans stopped selling individual insurance plans. The next year, the final two carriers left the individual market. It was a total meltdown.

The lesson most observers took from this was that insurance market regulations would not work without a mandate: In 1994, a Republican-led legislature had killed an individual requirement to carry coverage but left guaranteed issue and community rating in place.

Obamacare, of course, has a mandate, but what's happening in the health law's exchanges is starting to echo what happened in Washington and other states that experienced death spirals.

Individual insurance premiums have spiked all over the country. Far fewer people have signed up for coverage than expected, with sign-ups undershooting Congressional Budget Office estimates by about 40 percent. The people who have signed up, meanwhile, have tended to be sicker and more expensive to cover, according to health insurers. "For every dollar we brought in last year, we paid out $1.26 for medical care," Michael E. Frank, the president of Blue Cross and Blue Shield of Montana, told The New York Times this week. "In the first six months of this year, we have already paid $4.17 million in medical costs for the top 10 individuals. That's $70,000 a month for those individuals."

And even with the mandate in place, some people appear to be gaming the system. A top actuary for insurer Highmark told the Times that in Pennsylvania, roughly 250 of its beneficiaries on had already incurred more than $100,000 in expenses this year. "People use insurance benefits and then discontinue paying for coverage once their individual health care needs have been temporarily met," he said, driving up the cost of coverage for everyone. Last year, UnitedHealth also indicated that individuals buying coverage and dropping it was driving losses.

As all this is happening, of course, insurers are bailing on the system, unable to make the numbers add up.

It's not an exact replica of the Washington state experience, but there are certainly similarities. The underlying point of all of this is that if the law's exchanges remain on their current wobbly trajectory, its dysfunction is nearly certain to grow. And the rough negotiations between Aetna and the administration may make insurers who are already losing money even more wary of further participation in the system.

That means that the prospect of significant further reforms may soon be on the table—which will likely include everything from poorly conceived state-based single-payer plans to poorly conceived federal health insurance systems to, ah, poorly conceived conservative reforms. If anything, reforming health reform will be even more difficult than the initial project.

In the meantime, Obamacare will likely continue to falter. The law, of course, has avoided multiple potential near-death expenses thus far, and it may still survive. But at the moment, at least, it looks like one sick patient.

NEXT: Polish government planning to make it a crime to say 'Polish death camps'

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  1. So, it’s working as designed.

    1. Yep….

      1) The Obamacare exchanges harvested the email addresses and other contact information of almost the entire low income population within the U.S. There is 0 doubt that that information is now being used by Obama’s campaign (now rebranded as Organizing for America) to assist future electioneering by the Democratic party in pursuit of the holy grail of a permanent majority and control of the presidency.

      2) Even though the public option was dropped from the original version of Obamacare, it’s pretty much inevitable that as the death spiral accelerates towards the event horizon, the destruction of private markets caused by Obamacare will be cited as the reason why it must be instituted urgently.

      1. And those of us whose reaction to that clarion call is “Oh my; another luxury cruise by the same people wh brought us the Titanic!” Will be roundly ridiculed by all Right Thinking Liberals.

        1. My last pay check was 9700 dollar working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can’t believe how easy it was once I tried it out.
          This is what I do,…. http://bit.do/FOX92

      2. On the other hand, all that data and addresses are also in the hands of the Russian gov and Peruvian hackers. So how will the poor folk know if their receiving emails from natural viagra ranchers, Russian trolls or the Obama Foundation for Obama?

      3. Seriously? You don’t think they already have all of that? Consider the DMV, HHS, and Medicare/Medicaid are all systems they can already draw from.

        This is before you even consider things like the NSA. I mean, honestly you’ve probably already given the government the above information and didn’t even think about it. I’m being 100% serious that they didn’t need the ACA for that.

        1. Wait… I never considered that before!
          So all of those government agencies might be getting click-through money from the advertisers they share their information with?!

          Wow… very ‘capitalistic’ AND fucked up at the same time!

    2. EXACTLY! That was what vile hate America first 0bama/Dim lawless, fascist commie traitor obscenities intended from the first, to destroy America’s health insurance in particular and America itself in general.

    3. Hey! Don’t contradict Mr. McArdle.

      After all, there is a fine line between disingenuity and mendacity.

      1. “The fundamental problem is simple:….”

        Anyone? Anyone?

    4. Anybody can earn 450$+ daily… You can earn from 9000-14000 a month or even more if you work as a full time job…It’s easy, just follow instructions on this page, read it carefully from start to finish… It’s a flexible job but a good eaning opportunity.. go to this site home tab for more detail… http://bit.do/ctDjs

  2. The latest reports are that Aetna threatened to pull out of the exchanges if the feds didn’t approve their acquisition of Humana. This is all about a big greedy corporation behaving badly not an indication of problems inherent in the system. Or something like that.

    1. You could be, you know, logical, and read that letter the logical way, which was more or less “FYI, if you don’t approve this merger we’re going to have to pull out of these exchanges because we won’t be able to afford to stay in”. But why be logical when there are KKKorporashunz to blame?

      1. Since when does logic trump emotion?

        1. Also, since when do people always take comments, even in letter, at face value?

        2. Also, since when does trump emote logic?

          1. If logic were an emotion, maybe he would. He emotes all the other ones, often loudly. If logic IS an emotion, than the Vulcans have it all wrong, and Data is more human than he thinks.

    2. Even if true, Aetna undoubtedly wanted the acquisition of Humana to offset its losses in the exchange.

      1. Peter talked about the merger and offsetting losses in the article.

        Did you guys read the article or jumped straight to comments?

        1. I read the headline, skimmed the comments, then read the article. See below.

        2. But you have to admit, it was a fuck-of-a-correct guess, wadn’t it?

          1. Yes, I admit that you were right!

            And yes, I saw your comments below after my comment above =D

    3. Diane Rehm and virtually all of her fans would completely agree…
      And she and her fans are about as economically illiterate as they come…

  3. Get ready for some long lines for basic services.

    Free sh*t everybody!

    1. The problem with free shit is that it is still shit.

      1. As long as its someone else’s sh*t though. right?

          1. But its your dog.

            1. +1 Peanut Butter

      2. and it’s not exactly free

    2. Long lines? I don’t believe it for a second. Just look at the VA, their scheduling system proved that free stuff doesn’t lead to long lines. Just ask a Vet, they will tell you.

      1. If you can find one who hasn’t died waiting…

  4. PPACA was a perfect blueprint for how health insurance in the United States should be handled. The only thing the crafters didn’t plan for was the saboteurs, kulaks and wreckers.

    1. They did.

      The original version had a public option that was supposed to handle the people who couldn’t get health insurance. They didn’t have the votes to pass the bill with that camel nose towards NHS style health care in it, and at the instistance of some Democratic senator, the public option was dropped from thebill.

      But… had the option been in there; the people who couldn’t get affordable insurance would have been able to sign up for the public option; this option would ahve reduced the opportunity cost to canceling one’s insurance, with the result that the death spiral would simultaneously cause health insurance companies lurch towards bankrupcy while driving voters to get their health care from the government.

      Just because it fails at its stated purpose in no way implies that it isn’t working exactly as its architects hoped it would.

      1. Even with the public option consumers would cover the cost with either higher premiums or higher taxes. It fails because there is nothing “affordable” about it.

        It should have been called “Fucking non-competitive, heavily regulated, we’ll make you pay for it somehow, motherfucker Care Act”. That is a more appropriate name.

        1. But, but, but… Healthcare is a right!

          /prog derp

          1. Hell, yes! Just ask Bernie and Hillary.
            Two of the most economically-illiterate candidates since, who? FDR?

  5. Why didn’t anyone try to warn us?

    1. Calculon: The year was 2019, and I was just a lowly robot arm working on Project Satan, a savage, intelligent military car built from the most evil parts of the most evil cars in all the world. The steering wheel from Hitler’s staff car. The left turn signal from Charles Manson’s VW. The windshield wipers from that car that played Knight Rider.
      Fry: Knight Rider wasn’t evil.
      Calculon: His windshield wipers were. It didn’t come up much in the show, though. Anyway, only after bringing Project Satan to live did they discover they had made a horrible mistake. For you see, it was pure evil!

    2. Thanks for the laughs!

  6. This slow exodus of insurers from the health law’s marketplaces represents a serious threat to the continued stability and existence of its exchanges. Obamacare is perched on the edge of a death spiral.

    I would argue it was ‘perched on the edge of a death spiral’ the moment we “found out what was in it”.

    It’s now IN the death spiral.

  7. This whole idea never struck me as something that was designed to succeed. Rather, it looks like it was intended to be such a convoluted, infuriating mess that those opposed to a single-payer/universal system throw up their hands and just give up.

    1. I know this is a popular sentiment, but I have to disagree that this was designed to fail.

      Everything in the PPACA makes perfect sense once you realize this is a one page bill — insurers must sell to anyone who asks, at a “community rating” price that ignores the individual’s health — and 1000+ pages of attempts to mitigate the known unintended consequences of that first page. Plus some throw-ins to buy votes.

      It was written by people who think they can and should dictate how patients and doctors and hospitals and insurers and suppliers and employers and taxpayers and regulators must interact in this idealized socioeconomic happiness machine.

      Far from being designed to fail, they had all contingencies covered and are shocked that it doesn’t work. As God is their witness, they thought turkeys could fly.

      1. Ironically, turkeys can fly.

      2. “It was written by people who think they can and should dictate how patients and doctors and hospitals and insurers and suppliers and employers and taxpayers and regulators must interact in this idealized socioeconomic happiness machine.”

        Further, these people never ran a business nor do they have the least idea of the complexities in doing so, ignoring government regulations for the nonce.
        I would bet that every one thinks the difference between the raw costs of a product’s labor and material and the selling price represents “profit”.

      3. This. A thousand time this. The Washington Liberal Establishment has never seen a problem it couldn’t formulate a solution for. A nice, simple, ideologically correct solution that, upon implimentation WILL NOT WORK.

        And the Republcan (one can’t really call them conservative) Establishment is only a tiny fraction of a percent better.

        These idiots work in Washington DC, surrounded by sprawling examples of government failure. Schools that don’t teach, a Metro system that is both overloaded and short of riders, public housing one could be taken to the World Court for if it were used to hold POWs, and a municipal water system parts of which haven’t been remediated since the Civil War (and on hit days they smill like it).

        And they simply Don’t. Get. It.

        We really need to tell these swine, “Look, we understand there’s a lot you want to do. But we need some basics taken care of first. Show us you can get the interstates and bridges fixed, and then we’ll talk about the more complicated stuff.”

      4. And the only thing they’ve learned through this process is:

        “See? Heritage Foundation Healthcare just doesn’t work! MORE SINGLE PLAYER HARDER!!!!”

  8. Dammit, if only someone had seen this coming….

  9. This is a reference to a provision inserted into a 2014 spending bill limiting the ability of the administration to dip into Treasury funds to pay out funds under the law’s risk corridors provision

    This may have been the single smartest thing the Republicans did. Seriously. Without hobbling the federal government’s ability to endlessly subsidize (ie carry, pay for, shower graft upon… call it whatever you want) the structural failures of Obamacare would have been masked for years, if not forever.

    If the system can’t stand on its own, then it’s a failed system. If it needs massive subsidies from government, then it’s nothing more than a government program paid for out of the general fund– which is precisely how the ACA WASN’T supposed to be.

    1. Like blaming Venezuela on falling oil prices – their system of subsidies was always unstable, and only worked when oil was over $100/barrel. When the subsidy went away, the system crashed – and the lefties blamed the lack of subsidy.

      1. The Labor Party in Britain still hasn’t gotten over Thatcher because she denationalized a ton of state-subsidized failing industry, thereby rescuing Britain from managed decline.

        Despite Tony Blair giving Labor a ticket out of the wilderness by running on essentially a “Thatcher was right” platform, the British left today is rabidly Corbynite, a bunch of old Marxists who can’t fathom why their coal industry couldn’t go on receiving endless subsidies forever.

        The American left is similar. No matter how much evidence manifests to show that the administrative state sucks, they just keep on keeping on, twirling twirling towards socialist freedom.

    2. “If it needs massive subsidies from government, then it’s nothing more than a government program paid for out of the general fund– which is precisely how the ACA WASN’T supposed to be.”

      More precisely, it’s the opposite of how the ACA was sold.

      #workingasplanned

  10. Good news: Your health care is free, comrade!
    Bad news: The next available doctor’s appointment is in 2049…

    1. Damn it, I have the plumber scheduled for that year!

      1. Be sure you have your 27B/6!

        1. +roll 1D6

          1. Is there a modifier for voting democrat?

            1. Depends, how many zeroes are at the end of your ‘vote?’

  11. Don’t worry, Hillary will fix this by allowing illegal aliens to sign up! That will help the balance sheets, right…?

    1. Clearly all woes can be fixed by doing the same thing over and over again.

    2. Mayan and Aztec home herbal remedies!

  12. “What’s up, peanuts? So I’ve been spending too much time making fat stax on my market shorts here in Fundiestan, but this caught my attention. These drawdowns are an anamoly; the exchanges are going gangbusters everywhere else. Maybe if you weren’t a bunch of shills for the Bushpigs you could see this isn’t a big deal.”

    /shriek

    1. PHAKE SKANDULL! 8%!!! BEST FREE MARKET REFORM EVAH!!!!

      1. WHAT IF YOU GET HIT BY A BUS AND GET PREGNANT!?

        1. Wasn’t that Tony, the resident rocket surgeon?

          1. Yep, you’re right.

            A distinction without difference.

            1. Tony doesn’t try to hide his derp, he flaunts it. Shriek tries to hide it and always ends up showing his arse.

              1. I thought Shriek was Tony.

                1. No, Shriek’s a window-licking bet-welsher who lives in some Podunk town in Georgia that he loathes, but apparently can’t leave.

                  Tony’s a moderately intelligent gay prog who lives in Oklahoma. He spouts the standard prog line, but will at least engage in a semi-forthright manner and doesn’t use the same lines over and over like shriek or amsoc. As far as I know, Tony’s never been stupid enough to make a market bet with anyone here.

                  1. Tony may be a gay prog but he’s also one racist motherfucker.

                    1. Tony may be a gay prog but he’s also one racist motherfucker.

                      This. He is one helluva brown-hating elitist.

                    2. You say that like there is some sort of contradiction.

                    3. “But”? Progressivism is racist. Who do you think brought us eugenics and segregation?

        2. Oooh, I’d forgotten about that! And I’m still wondering how the bus was going to get anyone pregnant.

          1. Obviously the bus knocks her out, and then the doctors…well you know.

            1. “work” on her?

      2. I thought there was two of you

  13. As the cascade of insurance carriers exiting the Obamacare marketplaces makes clear, things are not going as planned.

    But they are going as expected.

  14. i’ll give it to Obama that he is smart enough to pull off the biggest fraud and scam in history by getting elected.

    That’s it though.
    From that moment on, he has proven time and again to be the stupidest politician of all time.
    Think about that.
    He is dumber than George Bush, FDR, LBJ, George Bush, TR, Carter, Nixon, even Wilson.

    I know there is a valid argument that these things are intentional for short term gain without regard for the consequences but he obviously has greater devotion to Marxism than any other president. Worse yet, he embraces the already corrupt Marxism of the apparatchik, not the idea of utopia through equality. That just shows that he knows it is a scam and still tried this crap because he figured it was better than capitalism.
    He is the worst kind of idiot. Kind of like a teacher in public school teaching history.

    1. i’ll give it to Obama that he is smart enough to pull off the biggest fraud and scam in history by getting elected.

      Obama didn’t pull of a fraud and scam, it was crafted for him. He’s the “boy-band” of Presidents.

      1. You are correct. He is a puppet if ever there was one. I guess he is just a gifted actor with some good one liners. And a helluva public speaker.

        I guess all it takes is some good talking and some class warfare.

        1. He is not a particularly good public speaker – sometimes he can read a teleprompter well.

          1. Yeah, compare Obama to someone with even the most basic of oratory skills…Nigel Farage is the example I always go to…and he comes off as stiff and extremely robotic.

            “I am going to…pause dramatically when I say something important…and when it’s more important, I enunciate more…and when I want something to be super important…I WILL YELL IT.”

            1. I am going to…pause dramatically when I say something important…and when it’s more important, I enunciate more…and when I want something to be super important…I WILL YELL IT.”

              Which is boilerplate modern political oratory. Yes, awful.

          2. He’s basically Wolf Blitzer. Put him on Jeopardy even with a couple of categories tailored to his interests, and he would be cover-your-eyes awful.

            1. A-10 War Thog

      2. I believe the term is “JV Team”.

      3. Token Monkee

    2. “That just shows that he knows it is a scam and still tried this crap because he figured it was better than capitalism.”

      For him, it has been. Obama and his family will enjoy a life of privilege and luxury far beyond what his meager talents would have brought him in a free market economy. Socialism always works great if you happen to be connected with the Party.

  15. Maybe do a little research next time

  16. Blue Cross and Blue Shield: “For every dollar we brought in last year, we paid out $1.26 for medical care!”
    Obama: “Don’t worry, you’ll make it up on volume!”

    1. Blue Cross and Blue Shield: “For every dollar we brought in last year, we paid out $1.26 for medical care

      I believe lefty econs such as Christina “That’s no moon, that’s an economist” Romer refer to such maths as the “multiplier effect.”

  17. Penaltax is $695 individual and $2,085 family for 2016.

    That’s going to be a barrel of laughs come tax filing time.

    1. Given what I’m paying for insurance, it doesn’t seem that bad.

      1. Don’t forget the “Or 2% of your gross income, whichever is greater” addendum on the $695/$2085 spread.

        1. So that still isn’t too much. If you don’t think you need insurance, paying the penalty is a no-brainer. I’m 50 with a wife and 2 kids in college. I am not going to take a chance not having insurance, but I could see a lot of people doing the math and deciding to roll the dice.
          I have it through my company and it’s about $7500/year, so not worth forgoing and paying the tax. The savings for me v risk doesn’t work.

  18. Obamacare is perched on the edge of a death spiral.

    I disagree. This is the early stage of a death spiral – riskier groups (check), skyrocketing premiums (check). If the enrollment for 2017 shows a drop in healthier beneficiaries and concentration of risk, following on the big premium increases that will go into effect for 2017, we will be more into the middle stages of a death spiral.

    The dynamics of a death spiral are already in place and presenting. If we change nothing about this program, we will continue to have a death spiral.

    A death spiral was built into this program from day one – anytime you have no medical underwriting and community rating, you have the preconditions for a death spiral.

    1. “A death spiral was built into this program from day one – anytime you have no medical underwriting and community rating, you have the preconditions for a death spiral.”

      And yet it wasn’t really intentional.

      After Obama had already gone to the wall for the plan, he realized that the only plan they could get passed was a plan that would cause the system to implode. The calculation was done purely on the political side of the equation: failing to deliver would make him seem like an ineffective leader ahead of his reelection campaign, and the fail inducing parts of the plan weren’t to be implemented until after he was reelected. The smart thing to do in that situation from a political perspective was to back the failure inducing plan.

      If you care about healthcare for the middle class, of course, that’s the last thing you do, but in all honesty, Barack Obama pretty much hates the American middle class for being racist, homophobic, and selfish. Sometimes, I think he forces the American people to do things specifically because they don’t want to. The thing he did accomplish with the ACA was the expansion of Medicaid, Medicaid being a big part of what was wrong with the healthcare system in the first place.

      1. The thing he did accomplish with the ACA was the expansion of Medicaid, Medicaid being a big part of what was wrong with the healthcare system in the first place.

        That’s why we needed more of it.

        1. Exactly.

          I didn’t think expanding Medicaid was possible. Doing it was just so stupid in so many ways.

          But if that’s what you want to do? If your goal is to expand Medicaid no matter the consequences?

          Then, wow, Obama’s an amazing guy.

      2. I think you are crediting them with too many evil genius points — the Top Men ™ who designed the bill are Well Meaning ™ and really believed they could redesign and perfect a complex industry. Although I agree that the plan B of “if it fails at least we expanded Medicaid” was implicit.

        1. Read what I wrote again.

          I’m saying the Top Men knew what would happen, but they couldn’t pull back because failing to get anything passed would make Obama look like a failure ahead of his reelection campaign.

          America hates failures.

          He also had one eye on what happened to Hillary in the wake of HillaryCare. Failing to get HillaryCare passed was a political disaster for Bill Clinton, and the Obama Administration was determined to avoid that pitfall.

          1. Right, and I think the hubris of these central planners would not allow them to entertain the thought that this would fail from the start. After all, they thought through all the potential problems and besides gave lots of leeway to the good people at HHS to nudge things into place.

            Would be great question to get answered — someone should ask Pelosi, “When did you know this was doomed to fail? Before it was passed or more recently?”

          2. He also had one eye on what happened to Hillary in the wake of HillaryCare. Failing to get HillaryCare passed was a political disaster for Bill Clinton, and the Obama Administration was determined to avoid that pitfall.

            Bill Clinton also got elected twice, and we’re about to have Hillary as our next two presidents.

            You’re being too clever by half, here Ken. The elephant in the livingroom you’re ignoring is that a president can be carried over the line by his supporters despite his (or her) failures.

          3. if that was his plan, it was a pretty terrible plan. passing the ACA is what fired up the tea party, and gave the GOP the ability to shut out just about everything he has tried since.

            there is no explanation that does not lead to the conclusion that they were completely wrong, in one way or another.

            1. if that was his plan, it was a pretty terrible plan. passing the ACA is what fired up the tea party, and gave the GOP the ability to shut out just about everything he has tried since.

              Exactly.

        2. “I’m saying the Top Men knew what would happen”

          Let me elaborate.

          Suderman knew what would happen. He wrote about it here beforehand.

          I knew what would happen.

          RC Dean knew what would happen.

          A lot of people here knew what would happen beforehand, and we wrote about it here on this website.

          It’s a stretch to assume that the top people in the Obama Administration and the Democrats in Congress are unlike us in that they didn’t know this would happen.

          They just didn’t care.

          You’re a decent person, presumably. In your daily business, you probably try to go around not hurting people because you’re a decent person. It may be hard for decent people to understand a philosopher king like Obama–whose primary motive is not caring about other people.

          Bill Clinton once executed a retard to prove that he was tough on crime.

          He got elected. He didn’t get Willie Hortoned. That’s the way they see the world.

          Obama may have fucked up the healthcare system for hundreds of millions of Americans, but what difference does that make to him? If he had it to do all over again, he’d presumably do the same thing and screw us all again–because it got him reelected.

          1. And count me among that group as well. If I had the capital and wherewithal I would’ve started my own insurance company catering to young, healthy people with concierge service and free massages, while being terrible at the expensive work of things like cancer and diabetes care. Even with the 3Rs there was a Moneyball opportunity for exploitation of the rules.

            Still, my experience with Democrat party faithful bureaucrats leads me to believe they really thought this would work. Your more cynical take is very convincing though…

            1. You probably can’t get licensed without opening an ER and without having both a Medicare intermediary and a Medicaid contract.

              The entire system is set up so that you cannot escape having to reimburse providers for the losses they take on Medicaid patients.

              Medicare patients present the same problem, but their average reimbursement levels are about twice those of Medicaid.

          2. Of course, both could be true. Plenty of the rank-and-file working on it probably had high hopes for saving the world, while your grizzled veteran political operatives were saying in private, “let’s sell this shit sandwich to the public and bank as much power as we can before the promises prove empty. Besides, we can always blame Intransigent Republicans. Speaking of which, get HHS to mandate abortifacients as minimal coverage because FTTW.”

          3. It’s a stretch to assume that the top people in the Obama Administration and the Democrats in Congress are unlike us in that they didn’t know this would happen.

            Paul Krugman, a nobel prize winning economist thinks that you can fix a depressed economy through stimulus spending.

            1. In theory he’s not necessarily wrong; but the second portion of Keynesian thought where you throttle benefits back to pay down the debt you’ve accumulated never seems to actually materialize so I do indeed doubt their premise. At the very least I know for a fact no politician has the guts to do what would actually be required according to Keyes.

      3. You forgot the part about God and guns. He hates that too.

        1. That’s because God and guns are loved by the racist, homophobic, middle class.

          That’s also why he forces Catholics to buy birth control for their employees, etc. Obama means to punish the American middle class, and he does so every chance he gets.

          He doesn’t say it in those terms, but if you’re a crazy person like me who pays attention to what he does rather than what he says, you can see a pretty consistent pattern there.

          He ain’t lookin’ out for the middle class!

          1. No argument here. I like what you’re saying and wish to subscribe to your newsletter.

    2. Progressivism is all about using the coercive power of government to force individuals to make sacrifices for the greater “good”, and Obama was successful in forcing middle class America to sacrifice their quality healthcare for the benefit of expanding Medicaid for the poor. Even if the system implodes, politically, walking that Medicaid expansion back is nonviable. I don’t think he considers it a failure.

      The poor got more Medicaid. He got reelected. Who cares about the middle class or the insurers?

      The greatest trick the Devil ever pulled was convincing the middle class that he cares about them.

    3. Surely young healthy people should shoulder the burden for irresponsible older sick people.

      What kind of ist are you?

      1. Medicaid is the worst part of it. The part with the lowest reimbursement rates. Show me a hospital with a proportionately larger share of their patients census on Medicaid, and I’ll show you a hospital with financial problems.

        And Medicaid isn’t about the elderly. It’s people who aren’t old enough to qualify for Medicare who also qualify for food stamps.

        1. I’ve looked at annual reports for several large insurers, and they all show negative margins on the Medicaid segment. But on the plus side, it’s a growing market!

          1. I used to do the daily reports and in-house statistics for the CFO at a private hospital on the edge of South Central Los Angeles.

            After that place closed down because there were so few non-Medicaid patients in the surrounding community, I ended up testing code for a company that did reimbursement software for the biggest hospitals and hospital chains in the country.

            All the providers lose money on Medicaid patients. Physicians offices can do okay if they turn themselves into a factory. But there aren’t any hospitals marketing themselves to doctors who mostly just serve Medicaid patients. Certain politically sensitive specialties pay better than others, but generally speaking, show me a hospital that’s had to close over the last few decades, and I’ll show you a hospital with a large Medicaid population.

  19. “This is simple business math. For insurers to operate on the exchanges, they have to bring in sufficient revenue to cover their claims.”

    Where’s Tony to denounce Suderman for being such a racist?

    1. Readying for Hillary in the TV ad thread.

  20. If anything, reforming health reform will be even more difficult than the initial project.

    I was thinking about these governmental issues last night, and was again struck by how stupid the architects are. Specifically, I must re-assert my opinion that Obama isn’t as smart as Obama thinks he is, and isn’t as smart as his loyal supporters say he is.

    On the scale of ‘smart presidents’, I put Obama at a C+. As a comparison, I put Bill Clinton at A-, and I put Hillary Clinton at around B+ (although it could be argued that Hillary Clinton is A+, because she’s never spent a day in jail while running a public, light-of-day ongoing criminal enterprise).

    Anyhoo, point being, that these systems are put in place and almost right away, the designers start nerfing one thing, buffing another. Then when the inevitable unintended consequences of that occur, they have to nerf the buffs, buff the nerfs, then nerf the nerfs, buff the buffs etc.

    1. *grabs Nerf dictionary*

    2. Anyhoo, point being, that these systems are put in place and almost right away, the designers start nerfing one thing, buffing another.

      These kinds of schemes usually can hold out when designed generationally, so one can front-load bennies by a generation before the bills really start coming due – therefore capturing and segmenting population into dependent political market over period of couple decades. Worked for Medicare, SSI, etc. Also seems to be working pretty good on the free college shtick too with all those decades-long loans.

      But pension/insurance Ponzi schemes already burnup ~15% of employer’s payroll outlay ‘before’ the taxes part. No room left on the ledger there. So ACA tried to front-load bennies in almost real-time before bills came due, and even Americans don’t forget history that fast.

      1. These kinds of schemes usually can hold out when designed generationally, so one can front-load bennies by a generation before the bills really start coming due –

        I totally agree. They couldn’t even create a system with deferred implosion occurring for Generation Zed.

    3. Again, you’re assuming his aims are the same as yours.

      He wanted to expand Medicaid, and he wanted to get reelected.

      He succeeded in both.

      Who are you calling stupid?

      It’s true that he has no conception of how capitalism and markets worth together to improve our standard of living by competing to increase quality and competing to bring down cost.

      He’s ignorant and wrong, but he’s not stupid.

      1. He wanted to expand Medicaid, and he wanted to get reelected.

        […]

        It’s true that he has no conception of how capitalism and markets worth together to improve our standard of living by competing to increase quality and competing to bring down cost.

        I believe that he believed that the ACA would generally work. I do believe that.

        I don’t believe, and I don’t see any evidence of the Medicaid expansion being a central feature of his re-election. I think you’re taking a side issue and pretending that it was the fulcrum upon which is 2012 campaign was centered. Very few voting Americans weighed his presidency on the expansion of Medicaid. It was too in-the-weeds. Example: I don’t see ANY Obama 2012 bumper stickers making reference to Medicaid, but I still see PLENTY making reference to Obamacare.

        1. “I don’t believe, and I don’t see any evidence of the Medicaid expansion being a central feature of his re-election.”

          That may not have been about getting elected. I think that may be his true heart showing there.

          Expanding Medicaid may have been one of the few things he’s done for what he sees as unselfish reasons.

          Reagan didn’t throw the Soviet Union on the ash heap of history for political reasons either. He played it for political advantage as best he could, but that was his true heart showing. “Tear down this wall”? He genuinely hated communists going back to what he blamed them for as SAG president.

          I think expanding Medicaid for Obama is like that. That’s Obama the community activist striking a blow against the rich middle class on behalf of the poor of Chicago. “Pay your taxes, bitches!”

        2. Think of this way: Obama couldn’t have expanded Medicaid by itself. There’s no way Congress would have voted for that.

          It had to be part of a bigger package to get rid of preexisting conditions, etc. So he backed the ACA.

          But even the individual mandate was always about making people pay into the system who don’t consume hardly any healthcare–that was to make up, again, for all the losses insurers suffer because of Medicaid and Medicare patients.

          When Obama went to the Supreme Court to argue for the individual mandate, they even argued that the whole ACA system would fall apart if people weren’t forced into effectively reimbursing insurers for gouging they suffer now–not to mention with a Medicaid expansion.

          1. Think of this way: Obama couldn’t have expanded Medicaid by itself. There’s no way Congress would have voted for that.

            It had to be part of a bigger package to get rid of preexisting conditions, etc. So he backed the ACA.

            I’m having trouble seeing the ACA as the mere kindling for the Medicaid Bonfire.

            I believe the Obama thought the ACA was a sufficiently wonky, complex system that could be passed whereas single-payer was not (although we’re closer today than we were then)*. It was always about the ACA, Medicaid expansion was icing on the cake.

            It was complex, negotiated behind closed doors, rife with corruption. Strategically, it was exactly the same as HillaryCare, but the bonus was that it wasn’t a shrewish unelected, unappointed official crafting it. At least it was our representatives in government.

            It was truly a case of “this time, we’ll get it” and it turned out he was right.

            *I can entertain the argument that we’re FURTHER away from single-payer because the ACA is such an unmitigated disaster, that voters may feel stung for the moment.

  21. Excellent Article, by the way, Petey boy. Keep it up.

  22. [insert iron law here]

    1. [insert squabbling about literalness of iron law here]

      1. [insert pissy comment about Moynihan being mean to the commies]

        Whoa… flashback to the early aughts.

    2. [insert iron law here]

      Which one? There’s several that could apply.

  23. But I’ve got coverage!!!!!

    Um, I can’t afford to use it really — but hey, I’m covered!!!!

  24. I blame TRUUUUUUUMP.

  25. If it gets repealed — no reform, just set the regulatory environment to status quo ante — what happens?

    1. I can buy the coverage I want.

    2. Poor people die in the streets.

    3. Soylent Green.

    4. Go big on Monocles

  26. This is simple business math. For insurers to operate on the exchanges, they have to bring in sufficient revenue to cover their claims.

    Pay no attention to the ZIRP* behind the curtain.

    * Zero Interest Rate Policy

  27. It was written by people who think they can and should dictate how patients and doctors and hospitals and insurers and suppliers and employers and taxpayers and regulators must interact in this idealized socioeconomic happiness machine.

    You know… morons.

  28. The “return” of the death spiral? As in, “I didn’t get my prediction right the first time, but this time I’ve got my act together?”

    It survived all those death spirals before, and it will survive Aetna. Any major new policy implementation has its tough moments. They’re not all death spirals.

    1. Even Baghdad Bob knows that one’s BS, Jacky.

    2. Hey, it takes time to keep up with your false assertions. I’m still culling links showing reason writers and commenters opposing eminent domain for the Keystone Pipeline. You’re like dealing with my mother. “Everyone knows that…”

      Yeah, no, not “everyone knows that”.

      1. If you are trying to keep up with Jack’s lies, you better bring a lunch and a cot; it’s gonna take you all day and night.

    3. It survived all those death spirals before,

      No, it hasn’t. Death spirals take at least two years, definitional minimum, to show up. This one is a little behind schedule, probably due to the cross-subsidization that is now failing.

  29. “Last year, UnitedHealth also indicated that individuals buying coverage and dropping it was driving losses.”

    I guess corporations, capitalists and laissez-fairyans like free markets…until they don’t?

    1. You couldn’t really couldn’t say one way or the other based on a heavily regulated, legally cartelized market like health insurance.

  30. “The law, of course, has avoided multiple potential near-death expenses thus far…”

    Freudian slip?

  31. Prog outlets are barely mentioning the financial losses. To them it’s all about a corporation getting revenge on Obama. Vox headline: “It sure looks like Aetna quit Obamacare because Obama blocked their merger”, with one mention of how large their losses were followed by an Elizabeth Warren quote about how evil it is to not like to lose money

  32. Suderman does a fine job covering this topic.

    1. Yes. This is the best article this week.

      Congrats, Peter!

  33. Is there some reason Gary Johnson and Trump aren’t airing anti-ACA ads on tv, putting Clinton on defense?

    Trump apparently doesn’t want to even campaign, but what about Johnson? Does he not have money? Obamacare was the driving force behind GOP’s record setting house takeover. People come out to vote on that issue.

    “Obamacare is broke” should be slam dunk line in this election year. You don’t even have to say you want to repeal it. Clinton is facing some soft opposition right now. They ain’t playing to win.

    1. Trump is an idiot or a Clinton plant (possibly both).

      Johnson is busy praising Clinton because he wants to be seen as the cool socially liberal kind of libertarian, not like that mean crusty Ron Paul dude.

  34. “Designed to fail” and “a feature, not a bug” come to mind.

  35. Don’t Fret – central committee has a new 5 year plan.
    Wait till you see it!

  36. Clinton/Trump both want single payer healthcare. Again, where are Johnson/Weld? Why are they not offering a clear libertarian, free market alternative to ObamaCare?

  37. Christopher . if you, thought Maria `s postlng is astonishing… on thursday I got a gorgeous Honda NSX from having made $8819 this-past/5 weeks and-more than, $10 thousand this past munth . without a doubt it is the nicest work Ive had . I started this 8-months ago and pretty much immediately startad bringin home at least $78.
    +_+_+_+_+_+_+_+_+ http://www.factoryofincome.com

  38. Premiums, risk pools, exchanges, bronze/silver plans, provider navigators, blah… I was never able to wrap my head around all this. But I don’t think we really need much green eye shade wonkery over why firms are quitting and why the law is bad. Not a single one of the law’s creators wanted them or their family to have anything to do with ObamaCare. You don’t have to be food critic to stay away from diners the cooks would never eat at.

  39. Just one more reason why EVERY candidate for national level office should be required to read Thomas Sowell’s Basic Economics and take a test of comprehension.

    Anyone who passed ANY course in Econ 101 knew this entire idiocy was doomed from the start.

    But Dr. Sowell spells out the why in words so simple and straightforward even the stupidest party hack should be able to grasp the concept.

    1. Dittos, and I’ll add that those of us who oppose gambling also knew it was *immoral* from the start.

  40. My mothers neighbour is working part time and averaging $9000 a month. I’m a single mum and just got my first paycheck for $6546! I still can’t believe it. I tried it out cause I got really desperate and now I couldn’t be happier. Heres what I do,

    ———– http://www.Max43.com

  41. My mothers neighbour is working part time and averaging $9000 a month. I’m a single mum and just got my first paycheck for $6546! I still can’t believe it. I tried it out cause I got really desperate and now I couldn’t be happier. Heres what I do,

    ?????? http://www.Max43.com

  42. A quibble perhaps, but can we please not confuse a *medical insurance* law with anything to do with *health,* or even with “health care”? A health care plan is an individual choice to eat a reasonable diet, not use drugs, wear a seat belt, etc. Obamacare is a medical insurance boondoggle…even if that does take longer to type.

    1. I don’t think that’s a quibble. Someone here made that point during the debate and it changed the way I post about the issues.
      Similarly, I learned to call government schools, government schools. Public schools are any open to the public (including so-called ‘private’ schools. Government schools are organized by the government, employ teachers paid taxpayer money by the government.

  43. As long as its someone else’s sh*t though. right?

  44. I don’t think that’s a quibble. Someone here made that point during the debate and it changed the way I post about the issues.
    http://www.s7te.com/non-classified/grape-juice/

  45. As long as its someone else’s sh*t though. right?

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