08.13.2014 1

Obamacare drop outs could mean health insurer taxpayer funded bailouts

No ObamacareBy Rick Manning

Who would have guessed?

Investor’s Business Daily reports that only 70 percent of those who signed up for Obamacare through health insurer Aetna are actually paying premiums and remain in the system.

Not exactly a shock that the government health care system that many people believed was free, ended up finding a large drop off in subscribers once the bill came due.

No one knows if other health insurers are experiencing the same drop-out rate as Aetna, but what rumblings in Washington, D.C. make clear is that health insurers are feeling the pinch from the underperforming system.

Florida Senator Marco Rubio warns in a FoxNews.com editorial that under Obamacare, “…taxpayers will make up the difference for health insurance companies whose plans lose money under ObamaCare.”

And the problem of Obamacare subscribers dropping from the system is likely to become more acute in 2015 as health insurers are announcing rate increases that continue to far exceed inflation.

This is on top of the 14 to 28 percent increase in health care costs that the American public has endured from 2010 to 2012 according to a study on health insurance rates conducted by Wharton School economists for the National Bureau of Economic Research.

Next year, in Florida health insurance costs are expected to rise another 13 percent on average according to the Florida Office of Insurance Regulation.  In New York state and Denver, Colorado, rates are expected to rise even higher, while in the state of Georgia, they are expected to drop due to the entry of two new competitors into the state market.

Overall, as health insurance continues to take a larger bite out of people’s earnings, it is not unreasonable to expect that more and more of the individuals who have signed up for coverage will opt to pay a much smaller fine for failing to have insurance and take their chances that they won’t face catastrophic illness.

The lower number of people paying for their health insurance through Obamacare will have a significant impact on health insurer’s bottom lines.  Under the law, these losses will be at least partially covered by taxpayers who are on the hook to bail them out.

In fact, according to Rubio it is already happening with, “one large health insurer recently filed financial statements claiming they expect part of their revenue to come from American taxpayers via the ObamaCare bailout ‘fund.’”

In response to this projected health insurer bailout, Rubio has introduced legislation that would repeal the section of Obamacare that authorizes it.  Not surprisingly, the legislation has not seen the light of day in the Democrat controlled Senate — a body whose majority leadership loves to rail against big business ([particularly health insurers), while quietly allowing those same insurers to line up at the public trough to cover their Obamacare losses.

And the Washington, D.C. merry go round continues with those who help to write the laws protected from business losses with bailouts provided by the rest of us.  A completely predictable outcome of any legislation whether any lawmakers read it or not.

Rick Manning is vice president of public policy and communications for Americans for Limited Government.

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