Dear Editor:
Obamacare is in trouble, and the reason is that the five biggest health insurers are all losing money on the business they do in the public exchanges. Aetna, for instance, has lost $430 million on its Obamacare business since 2014. As a result Aetna is pulling out of 536 of the 778 counties where they participate. Two of the other large insurers are reducing their participation, too.
Why are the insurers losing money? Several reasons:
1) They are required by the Affordable Care Act (ACA, known as Obamacare) to sell insurance to everyone, young and old, sick and healthy.
2) Sick and old people buy more insurance than young and healthy people.
3) The ACA says insurers cannot charge any person more than three times what they charge another person. For instance, the average 64-year-old person consumes six times as much health care as the average 21-year-old person, but an insurer cannot charge the 64 year old six times as much, only three times as much. This, plus the fact that 21 year olds buy less insurance than 64 year olds, means the insurance company is going to lose money.
4) The ACA, however, provided "corridors" a plan whereby insurance companies that lost money would be reimbursed for their losses. But in 2015 the Congress failed to appropriate money for such reimbursements. Consequently, the insurers are losing lots of money and are leaving the program.
There is a way to fix this.
First, Congress needs to appropriate money for the reimbursements under the corridors plan and extend that plan beyond 2016.
Second, extend Medicare to people 50 or 55 and up, as suggested by Hillary Clinton. That would take those sick 64 year olds off the backs of the insurers and give them more room to make a profit.
The Wall Street Journal dismisses the Clinton suggestion saying, that's just "more government." Well, sometimes more government is a good thing.
Today there are about 20 million people who have health insurance under the ACA, and many of these people would not otherwise have health insurance.
The law is certainly a good thing for them. Of course, as with any large new program, adjustments and improvements will be needed. But it's better to fix it than simply repeal the whole thing as some politicians call for, without thinking even two steps ahead.
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