Last week Ed talked about the large, looming spikes in health insurance premiums which are coming our way. For anyone who has been paying attention since roughly 2008 this really shouldn’t be any sort of surprise. We had plenty of warning from conservative critics and it was at least suggestively supported by Democrats who kept changing their story on what the Affordable Care Act was really supposed to do. Originally it was going to lower rates. Then it was going to keep them roughly the same. Then the Democrats admitted that the rates would go up, but they would go up more slowly than they would if we never passed the legislation. (But hey… we had to pass it to find out what was in it, so I suppose all’s fair in love and legislative war.)
But there’s a bit more to the story here than is reflected in just the premium increases. Somebody has been taken for a ride and I’ll leave it up to you to decide whether or not you came out on the losing end. But there was certainly one set of winners in all of this. As David Williams pointed out at The Daily Caller last week, the biggest insurance companies have been doing a victory lap.
Meanwhile, as Americans are suffering from rising costs and less access to quality health care, the biggest winners from the passage of Obamacare are the insurance giants. In the aftermath of the government health care takeover, there has been an explosion of health insurance company profits, windfalls and megamergers. As “stock market darlings,” health insurance company profits have skyrocketed to all-time highs and stocks have split even thanks to the health care law.
Reports show the so-called “Big Five” health insurers – UnitedHealth, Aetna, Cigna, Humana, and Anthem – have all outperformed the broader stock market by a wide margin since Obamacare was signed into law in March 2010. That’s why America’s Health Insurance Plans, the industry’s main trade group, filed an amicus brief to defend the Obama administration in the recent Supreme Court case, King v. Burwell. And when the law was upheld, it was no surprise that there was a boost in health insurance company stocks.
What’s really curious is how the President can remain in full blown denial mode after all this time. Is it just political positioning or does Barack Obama honestly think this is how we wanted things to work out? (Wall Street Journal)
“My expectation is that they’ll come in significantly lower than what’s being requested,” he said, saying Tennesseans had to work to ensure the state’s insurance commissioner “does their job in not just passively reviewing the rates, but really asking, ‘OK, what is it that you are looking for here? Why would you need very high premiums?’”
I expect politicking from politicians since it’s sort of baked into the cake. If the President is just trying to cover his backside and paint a happy face on things, I may disagree with him and accuse him of being disingenuous, but realize that he’s just doing what politicians do. But when you hear him saying things like why would you need very high premiums I have to wonder if he’s actually out of touch with reality. The insurance industry is precisely that… an industry. It’s a collection of businesses in a capitalist system and they will charge precisely as much as they can get away with charging to maximize their profits just as any other business would.
At the same time, the federal government is doing nothing to address the other side of the scale in terms of costs. One of the key factors in keeping costs down was always going to be increased competition, including allowing companies to freely compete across state lines. Conservatives warned about the need for this all through the Obamacare battle and they were ignored. And yet we are still in the midst of an era of incredible consolidation as more and more large providers merge. Anthem is trying to absorb Cigna and Aetna is looking to take over Humana. If these go through, the number of major providers in the United States will be less than a handful.
If you ignore things like this you have no standing to claim to understand the scope of the cost problem and you forfeit the right to act surprised when rates unexpectedly keep going up. Unless, of course, you are just completely in denial.