Many of us thought that the purpose of the delay in implementation of Obamacare was simply to give time to drive Health Insurance Companies out of business. Here is proof positive. Now the States are being given grants to bear down on already under siege Companies. Forbes did an excellent piece on their financial state. Looks like by 2014 with the mandates already unerway, Obama will have gotten his wish. A one payer system.
The Health and Human Services Department is urging the states to apply for federal grants that will help them “crack down” on health insurance companies’ “unreasonable premium increases.” Of course waivers are available to the well connected businesses, not Health Insurance Companies, but I digress.
Nearly $200 million is available to “help fight health premium increases,” and that’s in addition to the $46 million awarded to 45 states and the District of Columbia last August.
The grants will ensure that proposed premium rate hikes are “comprehensively reviewed,” bringing greater transparency and openness to the rating process. HHS said the new funds also will give states the power to stop unreasonable premium increases from taking effect. CNS News
ObamaCare Is Starting To Bleed Insurers Dry
In an industry that already suffers low profit margins, mandates are driving insurers from the health insurance sector altogether.
But insurers are hardly profligate. According to Fortune magazine, the health insurance sector is among the least profitable in America–with a mere 2.2% profit margin. That’s good enough for 35th place.
Further, many insurers’ administrative costs–for salaries, rent and the like–are fixed. ObamaCare instructs them to drive those costs down as a share of their overall revenues. In order to do so, they’ll have to raise premiums or lay off workers.
Initially, though, insurers are simply taking ObamaCare on the chin.
WellPoint ( WLP – news – people), the health insurer with the largest total enrollment, is set to take a $300 million loss this year due to MLR-related costs. Already the insurer has reclassified more than half a billion dollars in administrative expenses as medical spending to help meet the loss-ratio target.
Connecticut-based Aetna ( AET – news – people ), which this month decided to pull out of Colorado’s individual market because of concerns about its ability to compete there, may hemorrhage up to $100 million thanks to MLRs this year
And Iowa-based Principal Financial Group ( PFG – news –people ) has stopped selling health insurance entirely, leaving about 840,000 people to scramble for new coverage–and depriving everyone else of one more option for insurance.
These new medical loss rules won’t just harm insurers–they’ll also deliver a blow to the broader economy.
Last week the nonpartisan Congressional Budget Office revealed that health care reform will cause 800,000 people to leave the workforce over the next decade. That’s 800,000 people who won’t be helping extricate the economy from the recession–and won’t be paying taxes.
Many businesses that offer health insurance have announced that they can’t afford to provide policies that comply with the new rules. They’ve threatened to quit providing insurance altogether or lay off employees.
More at Forbes
From US News:
The Internal Revenue Service says it will need an battalion of 1,054 new auditors and staffers and new facilities at a cost to taxpayers of more than $359 million in fiscal 2012 just to watch over the initial implementation of President Obama’s healthcare reforms. Among the new corps will be 81 workers assigned to make sure tanning salons pay a new 10 percent excise tax. Their cost: $11.5 million.