Heath insurance companies participating in the Obamacare exchanges are losing money hand-over-foot and many are warning that without major fee increases they will stop offering Obamacare plans.

In November, United Healthcare started the ball rolling by announcing that they were considering exiting the exchange marketplace because they lost almost a half a billion dollars selling Obamacare plans. A month later another insurer HealthSpan went further, they announced  they were indeed getting out of the Obamacare exchange marketplace.

Now even more companies are warning they may drop their exchange plans:

“Something has to give,” said Larry Levitt, an expert on the health law at the Kaiser Family Foundation. “Either insurers will drop out or insurers will raise premiums.”

And the insurers are looking for huge increases to reverse their loses:

The Blue Cross Blue Shield Association released a widely publicized report last month that said new enrollees under ObamaCare had 22 percent higher medical costs than people who received coverage from employers.

Aetna’s CEO Mark Bertolini said in February that he was concerned about the Obamacare risk pools (the balance of healthy and sick enrollees in a plan).  Apparently the risk pools for Obamacare have been weighted more toward the sicker enrollees than the insurance companies first estimated, leading to higher payouts. “We continue to have serious concerns about the sustainability of the public exchanges,”Bertolini said.

Obviously the best remedy for reversing those major losses by insurance companies, and preventing additional exits from the individual marketplace exchanges is a huge premium hike:

“The industry is clearly setting the stage for bigger premium increases in 2017,” said Levitt of the Kaiser Family Foundation.


Insurers will begin filing their proposed premium increases for 2017 soon. State regulators will review those proposals, and then can either accept or reject them.


Michael Taggart, a consultant with S&P Dow Jones Indices, pointed to data from his firm showing per capita costs for insurers are spiking in the ObamaCare marketplaces.


“We made a significant change in the rules with the ACA and we’re still working through the process to see how that market stabilizes,” Taggart said at a panel on Wednesday. “Is [a death spiral] a possibility? Sure it’s a possibility. I wouldn’t attempt to put a probability on it because I think there are a lot of things going on.”


One factor helping to prevent a death spiral is ObamaCare’s tax credits, which cushion the impact of premium increases on consumers.


“What we’re likely to see is more of a market correction than any kind of death spiral,” Levitt said. “There are enough people enrolled at this point that the market is sustainable. The premiums were just too low.”

The “big kahunas” of the Obamacare exchange market are the Blue Cross/Blue Shield plans. Their participation (or lack of) will determine whether the Obamacare exchanges are facing “corrections” or “death spirals”

There have been some rumblings of discontent from Blue Cross plans. The plan in New Mexico already dropped off the marketplace there last year after it lost money and state regulators rejected a proposed 51.6 percent premium increase. Now, Blue Cross Blue Shield of North Carolina says that it might drop out of the marketplace because of its losses.


Blue Cross of North Carolina CEO Brad Wilson said in an interview that the company had lost $400 million due to its ObamaCare business.


“We’re not alone and I think that that also is evidence to suggest that there are systemic and fundamental challenges that we all need to have a civilized conversation about,” Wilson said.


He said a key factor in the decision on whether to stay in the market next year will be whether regulators approve whatever premium increase the company ends up proposing so as to try to make up for its losses.


Gee whiz! Either major increases or the plan falls apart who would have thought that could  happen? Well actually except for Obama and his progressive lemmings, everybody predicted that would happen. But in the end they will try to find a way to blame Bush.

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