Texas A & M professor: 'We may be beginning to see the death spiral...'

The Texas Tribune published a story today outlining the precarious situation of the Obamacare exchange in that state. Several insurers are pulling out and those staying in are asking for massive premium hikes. It has one professor from Texas A & M wondering if the long-discussed death spiral has finally arrived:

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Insurance start-up Oscar announced on Tuesday it would partially withdraw from the Texas market, joining veteran health plans Aetna, UnitedHealthcare and Scott and White on the list of companies that recently announced they would abandon the marketplace created by President Obama’s signature health law. The companies said their costs of providing coverage to middle-income Texans have been unsustainable, fueling concerns about a lack of competition and consumer choice within the health insurance market next year.

The announcements come at a time of uncertainty for health insurance markets nationwide, with several major health insurers opting to abandon the exchanges in all but a handful of states. And Cigna, another health insurance company, last week told the Houston Chronicle it was “in discussions” with state regulators about exiting the Texas exchange.

“I think what we should be expecting is premiums that are substantially higher, and I think there’s a real risk that other insurers pull out,” said Michael Morrisey, a professor at the Texas A&M University School of Public Health. “We may be beginning to see the death spiral of insurance plans in the exchanges.”

Meanwhile, Blue Cross Blue Shield has not decided whether or not it will remain in the market for 2017. After a loss of $770 million in Texas last year alone, it is requesting a 60% premium increase for next year.

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Texas is not the only state facing skyrocketing premium increases and a shrinking number of insurance providers. Tuesday, the Tennessee insurance commissioner described the Obamacare exchange in her state as “very near collapse.” A spokesman for Blue Cross Blue Shield in Tennessee agreed with that assessment. BCBS in Tennessee has already been granted a 62% premium increase for next year.

An analysis performed for the NY Times by the McKinsey Center for U.S. Health System Reform found that 17% of Americans will have no choice of insurer next year as only one insurer remains in their area. That includes five entire states—Alabama, Alaska, North Carolina, Oklahoma, and Wyoming.

Obamacare is definitely not turning out as promised. As the NY Times reported last week, the law is less of an extension of employer-based insurance and “more like Medicaid, only with a high deductible.”

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David Strom 3:20 PM | November 15, 2024
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