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The ObamaCare Death Spiral

- April 19, 2016

As Insurers Are Forced To Raise Premiums On Consumers Or Pull Out Of The Marketplace Altogether, Hillary Clinton Still Touts The Failed Law

TOP TAKEAWAYS

  • After losing over $720 million on the exchanges last year, UnitedHealth Group announced it will be pulling out of the exchange in most states for 2017.
  • UnitedHealth's departure will cause more than half of the counties it participates in to drop to only one or two health insurance options.
  • ObamaCare exchanges are causing the nation's top insures to lose millions of dollars as Aetna, Humana, BlueCross BlueShield, and other insurers are hinting at a marketplace exodus.
  • Insurers will be forced to significantly raise premiums or exit the marketplace to stay afloat.
  • Insurers are beginning to file rate hike requests for 2017, with some already over 30 percent.
  • But even in the face of these failures, Hillary Clinton continues to tout ObamaCare and remind voters she has championed the same policies for decades.

CLINTON'S FAVORITE TALKING POINT: BEFORE IT WAS CALLED OBAMACARE, IT WAS CALLED HILLARYCARE.

Clinton: "Before It Was Called Obamacare, It Was Called Hillarycare, As You Remember." CLINTON: "Before it was called Obamacare, it was called Hillarycare, as you remember. I fought really hard. The insurance companies and the drug companies spent millions against me." (Hillary Clinton, CNN Democratic Presidential Town Hall, 3/4/16)

Click To Watch

UNABLE TO SUSTAIN ITS LOSSES, UNITEDHEALTH GROUP IS EXITING THE OBAMACARE MARKETPLACE IN MOST STATES IT OPERATES IN

After Hinting At A Departure For Months, UnitedHealth Announced That Due To Its Losses, It Would Not Remain On The Marketplace In Most States For 2017

On An Earnings Call Tuesday, UnitedHealth CEO Announced That The Insurer Would Only Remain In The "Handful" Of States On The ObamaCare Exchange For 2017. " The nation's largest health insurer is significantly cutting back its Obamacare business and will sell plans in only 'a handful' of state exchanges in 2017, its CEO said on a call with investors Tuesday morning." (Paul Demko, "Nation's Largest Health Insurer Dropping Most Obamacare Business," Politco, 4/19/16)

  • UnitedHeath Is Currently Participating In The Exchange In 34 States. "UnitedHealth currently sells coverage to exchange customers in 34 states. Tuesday's announcement came days after it already indicated it will drop out of Arkansas and Michigan next year and significantly scale back its footprint in Georgia." (Paul Demko, "Nation's Largest Health Insurer Dropping Most Obamacare Business," Politco, 4/19/16)

UnitedHealth CEO Stephen Hemsley Said The Company Expects To Lose $650 Million On The Exchange This Year. "UnitedHealth Group CEO Stephen Hemsley, who first hinted at this decision months ago, reiterated concerns about the financial viability of the law's health insurance marketplaces. The company said Tuesday it expects to lose $650 million on its exchange business this year." (Paul Demko, "Nation's Largest Health Insurer Dropping Most Obamacare Business," Politco, 4/19/16)

  • "The Company Lost $720 Million On The Newly Established ObamaCare Exchanges Last Year." "The company lost $720 million on the newly established ObamaCare exchanges last year, according to a much-anticipated earnings report released Tuesday. About one-third of those losses are due to 'advance recognition' of 2016 losses, the company said." (Sarah Ferris, "United Lost $720M On Obamacare Exchanges Last Year," The Hill, 1/19/16)

More Than Half Of The Counties Where UnitedHealth Participates Would See A Drop To 1 Or 2 Health Insurance Options If They Exit The Marketplace

Kaiser Family Foundation: More Than Half Of The Counties Where UnitedHealth Participates Would See Their Insurance Options Drop To One Or Two If They Exited The Marketplace. "However, the significance of United leaving the exchange market would vary substantially by state and could have a significant effect in some markets. In more than half of the counties where it participates - and 34% of counties overall - a United withdrawal would have an appreciable effect on the number of insurers competing on the exchange. More than one in four counties where United participates would see a drop from two insurers to one if the company were to exit and not be replaced by a new entrant, and a similar number would go from having three insurers to two. In total, 1.8 million enrollees would go from having a choice of three insurers to two, and another 1.1 million would go from having a choice of two insurers to one." (Cynthia Cox and Ashley Semanskee, "Analysis of UnitedHealth Group's Premiums and Participation in ACA Marketplaces," Kaiser Family Foundation , 4/18/16)

Other Insurers Are Dropping Hints Of A Marketplace Exit

Aetna CEO Mark Bertolini: "We Continue To Have Serious Concerns About The Sustainability Of The Public Exchanges." "'We continue to have serious concerns about the sustainability of the public exchanges,' Mark Bertolini said on an earnings call Monday, according to prepared remarks." (Peter Sullivan, "Aetna Voices 'Serious Concerns' On Obamacare Sustainability," The Hill, 2/1/16)

  • Aetna Says They Are In "Wait-And-See Mode" When It Comes To Leaving The Marketplace. "An Aetna official told Bloomberg News on Monday that it has not become more pessimistic since those comments, and that it is still in a wait-and-see mode." (Peter Sullivan, "Aetna Voices 'Serious Concerns' On Obamacare Sustainability," The Hill, 2/1/16)

Humana Is Evaluating Whether Or Not It Will Continue To Participate In The Marketplace. "U.S. health insurer Humana Inc. announced Wednesday that its profits fell significantly in the fourth quarter of 2015, largely due to rising unexpected costs associated with new customers who signed up for health care under President Barack Obama's Affordable Care Act. The company said that it is evaluating whether it will withdraw from the program in 2017." (Taylor Tyler, "Obamacare: Humana Considering Withdrawing From Health Care Marketplace," Headlines And Global News, 2/10/16)

"Blue Cross Blue Shield Of North Carolina Says That It Might Drop Out Of The Marketplace Because Of Its Losses." "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." (Peter Sullivan, "Insurers Warn Losses From Obamacare Are Unsustainable," The Hill, 4/15/16)

INSURERS ARE LOSING MILLIONS IN THE OBAMACARE EXCHANGES

McKinsey & Company Report: Insurers Lost Money In 41 Out Of 50 States In 2014. "And a report from McKinsey & Company found that in the individual market, which includes the ObamaCare marketplaces, insurers lost money in 41 states in 2014, and were only profitable in 9 states." (Peter Sullivan, "Insurers Warn Losses From Obamacare Are Unsustainable," The Hill, 4/15/16)

Many Of The Nation's Top Health Insurers Are Hemorrhaging Money On The Marketplace

UnitedHealth Group "Lost $720 Million On The Newly Established ObamaCare Exchanges" In 2015. "UnitedHealthCare Group, the nation's largest insurer, is upping its projected losses from ObamaCare even as its overall fourth-quarter earnings beat investors' expectations. The company lost $720 million on the newly established ObamaCare exchanges last year, according to a much-anticipated earnings report released Tuesday. About one-third of those losses are due to "advance recognition" of 2016 losses, the company said." (Sarah Ferris, "United Lost $720M On Obamacare Exchanges Last Year," The Hill, 1/19/16)

Humana Lost 30 Percent Of Profits In The Fourth Quarter Of 2015 . "U.S. health insurer Humana Inc. announced Wednesday that its profits fell significantly in the fourth quarter of 2015, largely due to rising unexpected costs associated with new customers who signed up for health care under President Barack Obama's Affordable Care Act. The company said that it is evaluating whether it will withdraw from the program in 2017. The Kentucky-based insurance company, which is expected to be taken over by rival Aetna later this year, said that profits fell 30 percent in the fourth quarter of 2015. It reported a net income of $101 million in that quarter, down from $145 million the previous year, according to Forbes." (Taylor Tyler, "Obamacare: Humana Considering Withdrawing From Health Care Marketplace," Headlines And Global News, 2/10/16)

ObamaCare Costs Have Contributed To Anthem's 64 Percent Drop In Profitability In One Year. "Insurance giant Anthem has said the same thing, even though Obamacare hurt its profitability in 2015. The insurer said Wednesday that profits in the fourth quarter dropped by 64 percent from a year earlier. Contributing to the drop was the increased cost to provide care to Obamacare enrollees, the company said." (Robert King, "More Obamacare Insurer Losses Coming," Washington Examiner, 2/1/16)

Aetna Reported Losing Money On The Exchange. "Many insurers, including Aetna, have been losing money on the ObamaCare marketplaces, also known as exchanges, in part because of a sicker and more costly mix of enrollees, known as the 'risk pool.'" (Peter Sullivan, "Aetna Voices 'Serious Concerns' On Obamacare Sustainability," The Hill, 2/1/16)

Cigna Reported Not Making Any Money On The Exchanges. "Cigna also said last year that so far it has not made any money in Obamacare, but will remain in the exchanges." (Robert King, "More Obamacare Insurer Losses Coming," Washington Examiner, 2/1/16)

Participating In The Obamacare Marketplace Cost Highmark Health $565 Million In 2015. "Highmark Health on Friday reported an operating loss of $565 million for 2015, saying it continues to be challenged by the high cost of health care for people who buy Obamacare plans." (West Venteicher, "Highmark Health Reports $565 Million Operating Loss," Pittsburgh Tribune-Review, 4/1/16)

INSURERS MUST CHOOSE: RAISE PREMIUMS OR EXIT THE EXCHANGE

As Insurance Companies Face Crushing Losses, They Must Choose To Either Raise Rates Or Pull Out Of The Marketplace Altogether To Stay Afloat

Kaiser Family Foundation Health Expert Larry Levitt: "Either Insurers Will Drop Out Or Insurers Will Raise Premiums." "'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.'" (Peter Sullivan, "Insurers Warn Losses From Obamacare Are Unsustainable," The Hill, 4/15/16)

  • Levitt: "Something Has To Give." "'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.'" (Peter Sullivan, "Insurers Warn Losses From Obamacare Are Unsustainable," The Hill, 4/15/16)

"There Is A Growing Likelihood That Insurers Will Push For Substantial Premium Increases, Creating A Political Problem For Democrats In An Election Year." "While analysts expect the market to stabilize once premiums rise and more young, healthy people sign up, some observers have not ruled out the possibility of a collapse of the market, known in insurance parlance as a 'death spiral.' In the short term, there is a growing likelihood that insurers will push for substantial premium increases, creating a political problem for Democrats in an election year." (Peter Sullivan, "Insurers Warn Losses From Obamacare Are Unsustainable," The Hill, 4/15/16)

  • "The Clearest Remedy For The Losses Is For Insurers To Raise Premiums." "The clearest remedy for the losses is for insurers to raise premiums, perhaps by large amounts - something Republicans have long warned would happen under the healthcare law, known as the Affordable Care Act (ACA)." (Peter Sullivan, "Insurers Warn Losses From Obamacare Are Unsustainable," The Hill, 4/15/16)

Kaiser Family Foundation Health Expert Larry Levitt: "The Industry Is Clearly Setting The Stage For Bigger Premium Increases In 2017." "The industry is clearly setting the stage for bigger premium increases in 2017,' said Levitt of the Kaiser Family Foundation." (Peter Sullivan, "Insurers Warn Losses From Obamacare Are Unsustainable," The Hill, 4/15/16)

Former Obama CMS Official Michael Adelberg: "It Only Makes Sense That Most Exchange Insurers Will Request Significant Rate Increases For 2017." "'Given that most carriers have experienced losses in the exchanges, often large losses, it only makes sense that most exchange insurers will request significant rate increases for 2017,' said Michael Adelberg, a former CMS official under President Obama and now a consultant at FaegreBD." (Peter Sullivan, "Insurers Warn Losses From Obamacare Are Unsustainable," The Hill, 4/15/16)

If Regulators Reject The Premium Hike Requests, Insurers May Exit The Marketplace. "Another risk, should regulators reject large premium increases, is that insurers could simply decide to cut their losses and drop off the exchanges altogether." (Peter Sullivan, "Insurers Warn Losses From Obamacare Are Unsustainable," The Hill, 4/15/16)

RATE HIKE REQUESTS HAVE ALREADY STARTED TO ROLL IN

In Virginia, Insurers Have Requested Rate Hikes As High As 37 Percent For 2017

Large Premium Hikes Have Been Requested By Virginia ObamaCare Insurers For 2017. "The first ObamaCare requests for 2017 premium hikes are now being filed and the initial news looks bad - at least in Virginia." (Jed Grahm, "Virginia Insurers Seek 18% ObamaCare Premium Hike," Investors, 3/13/16)

"Next Year, The Combination Of A Sicker-Than-Expected Insured Group And The End Of A Temporary ObamaCare Program To Offset The Cost Of The Sickest Patients Will Send Premiums Soaring In Virginia…" "Next year, the combination of a sicker-than-expected insured group and the end of a temporary ObamaCare program to offset the cost of the sickest patients will send premiums soaring in Virginia, the first state where 2017 rate filings have been made public." (Jed Graham, "Why Anthem ObamaCare Premiums Will Soar In Virginia As Humana Bolts," Investor's Business Daily, 4/15/16)

"The Average Weighted Premium-Hike Request Appears To Be 17.9%" For 2017. "Overall, the average weighted premium-hike request appears to be 17.9%, says Charles Gaba of ACASignups." (Jed Grahm, "Virginia Insurers Seek 18% ObamaCare Premium Hike," Investors, 3/13/16)

  • Anthem Has Requested A 15.8 Percent Rate Hike For Its Virginia Obamacare Enrollees In 2017. "Anthem (ANTM) HealthKeepers, one of the biggest players in the state's individual market, is seeking an average 15.8% rate hike for a projected 190,000 members, both on and off the exchange." (Jed Grahm, "Virginia Insurers Seek 18% ObamaCare Premium Hike," Investors, 3/13/16)
  • Aetna Has Requested An Increase Of 16.6 Percent For 2017. "Innovation Health, a partnership in Virginia 50% owned by Aetna (AET), is seeking a 16.6% rate increase for 61,000 members." (Jed Grahm, "Virginia Insurers Seek 18% ObamaCare Premium Hike," Investors, 3/13/16)
  • United Health Requested A Premium Hike Of 9.4 Percent. "UnitedHealth (UNH), which has dropped out of Arkansas and Georgia, is at least keeping its options open in Virginia. It submitted a filing requesting a 9.4% rate increase for its 6,900 members, according to ObamaCare enrollment tracker ACASignups.net." (Jed Grahm, "Virginia Insurers Seek 18% ObamaCare Premium Hike," Investors, 3/13/16)
  • "Carefirst BlueChoice And Optima Health, Are Seeking Rate Increases In Excess Of 30%." "Consumers may be able to switch to cheaper plans, which might also hold down their premium increases. But all of the carriers except for UnitedHealth appear to be seeking double-digit increases in Virginia. A couple of carriers with a combined 40,000 customers, CareFirst BlueChoice and Optima Health, are seeking rate increases in excess of 30%." (Jed Grahm, "Virginia Insurers Seek 18% ObamaCare Premium Hike," Investors, 3/13/16)
  • Optima Is Seeking A Rate Hike Of 37.1 Percent For 2017. "United Healthcare, Aetna and Optima forecast prescription price increases of 10 percent this year and a similar amount in 2017. They're seeking average rate increases of 9.4 percent, 13 percent and 37.1 percent, respectively." (Dave Ress, "Virginia Health Insurers Seek Double-Digit Premium Increases," Daily Press, 4/15/16)

This Week In New Hampshire, Minuteman Health Requested A Rate Hike Of More Than 45 Percent

Minuteman Health, One Of New Hampshire's Largest Insurers, Announced It Was Seeking A Rate Hike Of Over 45 Percent . "Minuteman Health, one of the larger insurers in New Hampshire that offer coverage to individuals under the Affordable Care Act, announced Monday that it could raise its rates by more than 45 percent in 2017." (Bob Sanders, "Minuteman Health Seeks Up To 45% NH Rate Hike For 2017," New Hampshire Business Review, 4/18/16)

  • Minuteman's Rates Would Jump From An Average Of $279.70 To $397.39 Per Month. "Minuteman's Rates, A Monthly Average Of $273.70 In 2016, Would Jump Up To $397.39 For Individuals Next Year Under The Preliminary Filing." (Bob Sanders, "Minuteman Health Seeks Up To 45% NH Rate Hike For 2017," New Hampshire Business Review, 4/18/16)

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