Get Ready! A new wave of Obamacare problems is heading into the shore this coming year. Since its founding, the federal government has used billions of taxpayer dollars to prop up the universal healthcare plan, but that funding is soon coming to an end. The healthcare initiative was built on a weak foundation and may not be strong enough to make the transition.
California’s state exchange, Covered California, just announced that premiums will rise next year by an average of 13.2 percent. The reason? Two federal government programs that were designed to provide funding to the state exchanges will expire in 2017. The most significant of these is the reinsurance program that covered the health care costs of the elderly and seriously ill members.
Another factor in the rate increase has to do with real accurate data. When Obamacare first started, budgets were created based on estimates and unrealistic enrollment expectations that never actually panned out. Now a few years into the program, insurers are able to more accurately evaluate patient claims and health status data. The insurers have determined that they greatly underestimated the number of sick people that would sign up for Obamacare, while also failing to predict the expiration of the various programs that propped up Obamacare.
Covered California has long been considered one of the better run state exchanges, so its coming rate increase raises considerable concern for weaker state exchanges. For example, Texas’s Blue Cross has already proposed a 60 percent rate increase. The rate premium increases will affect every American who purchase coverage through Obamacare — approximately 12 million people.
As Obamacare members see their rates dramatically increase, they will undoubtedly wonder where the “affordable” part of the Affordable Care Act has gone. The original intention of Obamacare was to provide healthcare to people who did not have coverage through their employer and could not afford to buy it themselves. This was seldom the case in practice. As rates continue to skyrocket, Americans may need to switch to less expensive plans that will offer lower care benefits, or worse — stop receiving any type of healthcare at all.
Even before the increase in premiums has taken place, many people are finding fewer and fewer options for their healthcare needs as state exchanges and their co-ops continue to fall apart. As with the larger insurers, the co-ops did not expect the huge imbalance of seriously ill members compared to healthy members.
Co-ops received hundreds of millions of federal dollars to set up the co-ops and keep them running for the first 20 years. Originally, 23 co-ops were established to provide reasonably priced services to the poor in their states. Today, just 3 years into the program, 14 co-ops have already closed down. 2 are suing the federal government to stay afloat, and many experts believe that the remaining 7 won’t make it through the end of the year. Each closing of a co-op creates more uninsured people scrambling to find new health insurance plans that they can afford.
Of course, in some cases, the state exchanges have failed its members through nothing more than incompetence and corruption. The most heinous of this situation is Oregon’s exchange, Cover Oregon. Oregon was given $305 million in federal loans to establish a state exchange that never made it through its first year of operation. The crony capitalists running the exchange habitually hemorrhaged this taxpayer money. Oregon’s governor at the time, John Kitzhaber, was in the middle of a re-election campaign for his unprecedented 4th term in office and saw the failing state exchange as a political liability. Instead of closing loopholes and fixing the nearly-finished exchange, Kitzhaber and his staff purposely allowed the exchange to fail so they could roll Oregonians onto the federal HealthCare.gov program. The $305 million in federal loan money set aside for Cover Oregon has disappeared without a trace. Kitzhaber is currently under a criminal investigation to determine whether he re-directed this money into his re-election campaign funds.
In the coming year, Obamacare will face many new challenges. The federal funding programs will soon expire, destroying the failed program’s safety net. If activist politicians truly want all Americans to have access to healthcare, major changes will need to be made to Congress’ Obamacare model — especially as the baby boomer generation grows older and sicker, needing more expensive medical services
Drew Armstrong is a 2015 graduate of California State University in Fullerton and a contributor at Red Alert Politics. He currently resides in Orange County, California.