I will be putting a couple of article together for this post to see if we can read what may happen down the road with ObamaCare and insurance companies.
Robert Laszewski — a prominent consultant to health insurance companies – wrote this blog post last week.
Will There Be an Obamacare Death Spiral in 2015? No – Health Care Policy and Marketplace Review
Obamacare contains a $25 billion federal risk fund set up to benefit health insurance companies selling coverage on the state and federal health insurance exchanges as well as in the small group (less than 50 workers) market. The fund lasts only three years: 2014, 2015, and 2016.
Of the $25 billion, $20 billion is earmarked for the Reinsurance Program and $5 billion goes to the U.S. treasury.
The statute very specifically limits funds collected to $25 billion over the three years––$12 billion in 2014. The source of these funds is the Obamacare $63 annual “Belly Button Tax” assessed on almost all people covered under a health insurance plan.
So this tells me that health insurance companies will operate risk free for three years under current law. The tax payers are insuring the health insurance companies from loss of revenue due to ObamaCare. Seems ironic – we are insuring the insurers.
Let me quote from the another article from linked here.
Bailing Out Health Insurers and Helping Obamacare - Weekly Standard
In other words, insurance purchased through Obamacare’s government-run exchanges isn’t even full-fledged private insurance; rather, it’s a sort of private-public hybrid. Private insurance companies pay for costs below $45,000, then taxpayers generously pick up the tab—a tab that their president hasn’t ever bothered to tell them he has opened up on their behalf—for four-fifths of the next $200,000-plus worth of costs. In this way, and so many others, Obamacare takes a major step toward the government monopoly over American medicine (“single payer”) that liberals drool about in their sleep.
While the previous post makes it seem as though ObamaCare provides insurance for the insurers, it is actually insuring people indirectly through these health insurance companies – FOR THREE YEARS.
Let me put it this way. Years ago we had gas company mergers. One of them was Exxon buying Mobil. So although Mobil gas stations and products still existed for a time after Exxon bought them – they were really Exxon. The same thing is occurring with health insurance. The government, using tax payer money, is buying health insurance companies on a three year buy out program.
What happens after three years? The fine schedule for not having health insurance will have changed. Right now it’s cheaper to pay the fine than to have insurance. Human nature says, if money is short, I will pay the fine. In 2016, it will be cheaper to have insurance than to pay the fine. But the government, after 2016, will no longer prop up the health insurance companies – and they will have to adjust their rates higher to stay afloat. The government will be in a position to totally undercut the rates from health insurance companies.
So to answer the blog title from the first link… the death spiral occurs not in 2015, but in 2017 when the government stops propping up these companies. ObamaCare is a devious plan to wipe out health insurance companies in 2017 and takeover the health care system. This is not the design of the American government.