CBS: Insurers backing out of the ObamaCare exchange markets

CBS News has hardly shrunk from reporting the multi-layered fiasco of the Affordable Care act. Earlier today, the network gave a substantial report on insurer cancellations due to ObamaCare mandates, but on last night’s evening news, Scott Pelley and Dean Reynolds pointed out a less-covered issue of insurer participation. Despite promises of more choice in the new system, most insurers haven’t expanded their offerings at all — and some may pull back even more:

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Stick around for Pelley’s report on the rescue of the “poor woman” who had been the face of Healthcare.gov, and his parting shot: ‘The site has not been a model of efficiency.”

This is not the only issue regarding insurers to arise this week. TPM reports that insurers are telling Congress that a delay of the individual mandate will make the price shocks worse in 2015:

The proposal to extend the open enrollment period, which has been endorsed by 10 Democratic senators, is a reaction to the well-documented problems with HealthCare.gov in its opening month. With many people having trouble applying for insurance through the website, and the administration setting a Nov. 30 deadline for the site to be fully functional, the senators say people need more time to sign up for coverage. The enrollment period is scheduled to end March 31. The senators haven’t asked for a specific new end date yet.

But expect to start hearing a significant amount of pushback from the industry, with a message focused on the fact that insurance premiums could skyrocket in 2015 if the enrollment period is extended. …

Right now, insurers need to submit 2015 rates to the U.S. Department of Health and Human Services between April 1 and April 30, 2014. If the enrollment period ends in March, as currently scheduled, insurers will know exactly what their customer base looks like as they make projections about their 2015 rates.

But if people can still sign up after March 31, either while or after insurers are making those calculations, it creates a few problems. Here’s the big one: Most experts assume that young and healthy people — who are crucial to making the law’s finances work by offsetting the costs of sicker and older enrollees — are more likely to wait till the last possible moment or until they get sick to sign up for insurance.

If that’s true and they can’t be accounted for when insurers are projecting their 2015 rates because of extended enrollment, that could lead to an older and sicker pool when those calculations for 2015 are being made. That would likely increase rates. And generally, the uncertainty about the pools could cause insurers to err on the side of caution.

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That problem will exist whether the mandate penalty gets delayed or not, though. The economic incentives all lean toward paying the fine and riding out the year for younger, healthier consumers.  The fine, which will be 1% of adjusted gross income, would be around $500 for an average household, which in some cases is the monthly premium cost for insurance, with thousands of dollars in deductibles before the first benefit is paid (and there are no subsidies to buffer the deductibles, either).  If younger consumers pay the fine and get seriously ill or injured, they can still buy insurance to cover their expenses, thanks to the must-issue mandate on insurers.  In most circumstances, that makes a lot more sense than buying insurance to avoid the fine and still paying perhaps $10,000 in combined premiums and deductibles before seeing any benefits at all, other than freebie contraception.

The sticker shock in 2015 may end up being worse than that already seen for 2014 — and it will hit a month before the midterms.  Democrats had better start thinking about that now, or reap the whirlwind a year from now.

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