It's Official, Obamacare Collapse Is Trump's Fault - Just Ask The WA Insurance Commissioner

Last night, Washington"s Insurance Commissioner Mike Kreidler sent out a press release noting that two counties in his state, Klickitat and Grays Harbor, would be left with no health insurance options in 2018.  Per the press release, the ~3,330 people in those counties currently signed up on the exchange would be able to buy insurance through the state"s high-risk pool but they would lose access to taxpayer-funded subsidies.

Currently, no insurer has filed plans in two counties – Klickitat and Grays Harbor.

As of March 2017, 1,119 people in Klickitat County and 2,227 in Grays Harbor County were enrolled in the individual market.

Under current state law, if no health insurer is available in a particular county, the only coverage option is through Washington state’s high-risk pool, WSHIP. However, because WSHIP is not a qualified Exchange insurer, subsidies would not be available.

And while it"s not terribly surprising that the Obamacare markets are collapsing in the state of Washington (they"re collapsing everywhere, just see here, here and here for a couple of examples), what is somewhat "surprising" is that Washington"s Insurance Commissioner has decided to place the full blame for Obamacare"s collapse, which has been ongoing and obvious for several years now, at the feet of the Trump administration.

“I’m deeply troubled by the changes we’re seeing for next year’s health insurance market,” said Kreidler. “The proposed drop in insurers and coverage areas clearly indicates to me that the uncertainty the Trump administration and the GOP-controlled Congress has sowed for months is sabotaging the progress we’ve made. Their actions, including failing to commit to fund the cost-sharing subsidies, not enforcing the individual mandate, and continuing to push in secret the severely flawed American Health Care Act are eroding confidence health insurers have in the market here and across the nation. These actions only increase premiums and decrease insurer participation.

“The Affordable Care Act has worked in Washington state because we fully embraced the reforms it offered – including expanding Medicaid and creating our own state Exchange. These decisions helped increase competition, provided better coverage and access, and fueled the largest drop in our uninsured in decades. Much more could be done to improve upon our progress, but that would take congressional action focused on shoring up the law, versus taking it down.

“For months, we’ve worked closely with our health insurers and other stakeholders in a concerted effort to try to explain to the Trump administration and congressional leaders what the impact could be to our market and most importantly, to our consumers, if this level of uncertainty and volatility continued. Today, our predictions came true."

And while we have every confidence that Kreidler would never attempt to mislead the residents of his state and/or engage in outright fearmongering for political purposes, we would kindly remind him that the insurance markets in his state, much like the rest of the country, collapsed in the 2017 plan year.  Moreover, even though he should be aware, Kreidler seems to forget that 2017 participation and plan rates were set in the summer of 2016, when Hillary was expected by almost every pollster in the country to be on the verge of a blowout victory.

We would also remind the Commissioner that lawsuits challenging the constitutional basis of Obama"s healthcare "penalties", which are mandatory and kinda sorta behave like...oh we don"t know....a tax, also started long before Trump took office.  But sure, it"s Trump"s fault. 

Healthcare: "Insurance" Now Just Means Redistribution

Authored by Gary Galles via The Mises Institute,

Americans have been fighting over health insurance reform for ages. For example, 25 years ago, in 1992, over 200 congressional health care bills were introduced.

Unfortunately, while the rhetoric has focused on insurance, such as how many would supposedly gain or lose insurance if some change was implemented, that has not been the real issue. Income redistribution has. As Henry Aaron estimated that year, implementing a comprehensive national health insurance system would redistribute more income than any single national policy then in existence.

What Is Insurance? 

How do we know insurance is not the real issue? Because claimed “reforms” violate so many principles of insurance.

Insurance is about reducing risk in the face of uncertain events. But insuring things that would happen for certain, say annual checkups, offers no risk reduction — it offers no benefits to weigh against the added costs of insurance administration that must be borne — yet such coverage is frequently mandated.

Similarly, small health care risks are cheaper to provide for from modest levels of savings, rather than bearing insurance administration costs. If one’s own resources were involved, absent government interventions, they would not be insured at all. Only when others are forced to bear much of the cost would people want insurance to cover such things.

Administrative costs are not the only issue, either. The benefits from risk-reduction through insurance would also have to outweigh the cost of the health care. This is made especially difficult by the fact that the insurance itself induces over-consumption of health care services.

However, when most health care costs are borne by third parties rather than individuals themselves, there are many margins at which those individuals will want better care (e.g., better and more specialized doctors and hospitals, more costly newer drugs, tests and treatment utilizing the latest technology, etc.), as well as more care. Since that added care need only be worth what an individual pays, net of insurance coverage, much of it is worth far less than its cost to society, further limiting what people would voluntarily cover based on the principles of insurance.

Those considerations explain why lunch insurance does not exist. You will almost certainly eat lunch, which also involves relatively small expenses, so there would be little risk reduction. And if someone else would pay most of your bill, you would order far more expensive lunches than otherwise, raising the premiums that you must be charged to pay for it. The benefits don’t justify the costs, again unless others are forced to pick up a substantial part of the tab.

Also, insurance is about risk reduction that people value more than the premium they must pay for it. Thus, voluntary market insurance would not mandate coverage of things people had virtually no risk of experiencing. Teetotalers would not willingly insure for alcoholism treatment. Those sure they would never use drugs would not insist on addiction treatment. Yet government “reforms” are full of such mandates. And a quarter-century ago, before many current mandates were in place, it was already estimated that up to one-quarter of the uninsured population traced back to such cost-increasing government-imposed coverage regulations.

The price controls reform proposals incorporate are also about income redistribution, rather than health insurance. Say that my age makes my actuarial risk six times that of my students. If, as Obamacare required, I could not be charged more than three times what they were, that does not reflect actual risks. Obamacare regulations simply force the young to subsidize the old. That rip-off of the young also explains why Obamacare threatened them with a penalty to force them to accept that bad "insurance" deal.

The mandate that insurance cover pre-existing conditions shows even more clearly that “reforms” were not really about insurance. Rather than pooling those with similar circumstances and risks, allowing the law of large numbers to reduce people’s exposure, it forces others to subsidize those who are already sick, while misdirecting their blame from government requirements to insurance companies who must charge others more to pay for them. Those sorts of after-the-fact possibilities are not offered in fire, automobile or life insurance. Similarly, casinos don’t let you bet once the roulette ball has stopped or the dice are still. Only government mandates can create such windfalls through health insurance. 

In addition, if health insurance reform truly aimed to benefit all Americans — rather than benefiting some by the intentional pick-pocketing of others — it would not have been “marketed” with so many lies, damned lies and statistics (See my article “Comparing Obamacare scams.”). Honesty would have sufficed if reform did what was being promised.

The health insurance debate has been so contentious in part because it has allowed massive income redistribution to be misrepresented as about overcoming market failures in health insurance. It helped sell Obamacare dishonestly and now portrays reducing massive theft from government targets as imposing heartless harm on others. Such misrepresentation may be able to produce misinformed political support, but it cannot generate policies that advance Americans’ general welfare.

Judge Rules Health Insurance Companies Matter More Than Taxpayers

Largely overlooked last week in the wake of President Donald Trump’s court battle was another controversial judicial ruling.

On Thursday the US Court of Claims rewarding Moda Health, an Oregon-based health insurer, $214 million for losses it took participating in the high risk insurance pools established under the Affordable Care Act. The dispute came after Republicans eliminated funding for tax payer subsidies to those firms that lost money writing insurance for high risk individuals.

As Judge Thomas Wheeler wrote:

The Court finds that the Government made a promise in the risk corridors program that it has yet to fulfill. Today, the Court directs the Government to fulfill that promise. After all, to say to [Moda], "The joke is on you. You shouldn"t have trusted us," is hardly worthy of our great government.

Of course history shows that this behavior is quite characteristic of "our great government."

After all, Obamacare itself was sold to the public based on multiple (and intentional) lies. These included, the cost of Obamacare and the impact it would have on individuals pre-existing insurance coverage, as well as their ability to keep their doctor. The Supreme Court was only able to maintain Obamacare by interpreting the individual mandate as a tax, after the legislation’s defenders explicitly argued it wasn’t.

The result of all of this was government effectively telling its citizens, "The joke is on you. You shouldn’t have trusted us."

Of course it is not Moda Health’s fault that government lied through its teeth, and it is easy to find sympathy in their plight. As they argued in this case, the company only “aggressively” engaged in the ACA’s high risk insurance pools because they had an expectation to be compensated by government, as initially outlined in the law. As such, the company has been suffering severe losses and almost went into receivership based on their dire fiscal situation.

Yet it is not the Obama Administration that will be left paying Moda Health hundreds of millions of dollars, but the taxpayers who themselves were victims of fraud. Further, since Moda is just the first of many health insurers suing the government of the change in policy, if this precedent continues the costs to taxpayers will end up being billions of dollars.

At the end of the day, Moda was not forced to enter the high risk market and did so knowing this was a highly controversial piece of legislation that was subject to change, and with a government that has a history of not upholding its promises. Just as contracts based on Ponzi schemes and other fraudulent forms of financing are not held up in court, Moda Health and other health insurance companies should not be entitled to the money Obamacare’s victims.

All last week’s court ruling demonstrated was that the interests of health insurance companies are to be protected at the expense of the American people. Unfortunately, that mindset also explains how America’s health system became what it is today.