The exit of UnitedHealth from the 34 Obamacare exchanges where it has been selling medical insurance policies signals the likely and eventual failure of the Affordable Care Act. Due to $650 million in cited losses in 2016, UnitedHealth’s departure will leave many consumers only one or two health insurance choices at their Obamacare exchanges. This exit is likely to drive up the cost of insurance plans sold at the exchanges.
There are some key problems with the way Obamacare is functioning that doom it to failure. Enrollees in health insurance via the Obamacare exchanges, according to the Blue Cross Blue Shield Assocation, cost about 22 percent more to cover than those who have employer-based health insurance. While UnitedHealth didn’t offer the lowest-priced insurance plans, it still failed to make a profit participating in offering plans on the exchanges.
Other insurance carriers, 70 percent of them, are sustaining losses participating in the Obamacare exchanges and are likely to withdraw from them as well. This will inevitably lead to higher premiums for the health insurance plans that will continue to be offered on the exchanges, and with the enrollees of the departed carriers enrolling in the remaining plans, the predicted “death spiral” of Obamacare seems quite likely.
This development follows the failure of more than one dozens of the state-based Obamacare exchanges, including the politically spectacular failure of Cover Oregon in that state. The states whose exchanges have failed, have joined the over-loaded and challenged federal Healthcare.gov exchange instead. Some states, including Oregon and Maryland, have sued the IT firms involved in developing their failed state exchanges.
The real problems with the United States health care system, including the number of citizens who lacked coverage and the expenses and bureaucracy involved in being covered, had very real solutions that could have been enacted by Congress, but none of those solutions involved engineering a complete takeover of the health insurance industry, more or less, by the federal government. Congress could have cut costs with market-based reforms that would allow competition and customer choice, and it could have allowed sale of insurance plans across state lines, and it might have also enacted a far more modest and cost-effective program to cover those who lacked coverage and couldn’t afford themselves to purchase it. But they opted, on strictly party-line votes and relying entirely on support of only Democrats in the Congress and the Senate, to pass the so-called Affordable Care Act that President Barack Obama signed into law.
At every level, except for the 13 million who allegedly gained coverage under the plan (most of them federally subsidized at taxpayer expense), Obamacare has been an epic failure. Any other attempt to re-invent in the form of a big government program, a system as complex as health care that has been far better performed by the free market, would be expected by competent economist to be a complete failure. The disaster that is Obamacare should be no surprise to anyone, and especially the critics of the variations of the Affordable Care Act, when it was debated in Congress, who predicted it would be a complete failure.
It is becoming more clear, with this news that UnitedHealth is exiting Obamacare, that President Obama’s so-called signature health care reform, is an epic failure. It is only a matter of time before the public sees, and also experiences first hand, how badly failed it is before Congressional members of both parties will have no choice but to repeal Obamacare and figure out how to truly reform health care. The sooner that day comes, the better for the American people.