Putting Insurers Out of Business

The Democrats knew full well when they passed Obamacare that eventually it will put health insurance companies out of business. They can’t claim to be too stupid to understand basic math because there was no need for them to understand. All they had to do was look to Massachusetts for a perfect example of what will happen. And things just keep getting worse there.

The Wall Street Journal: The Massachusetts small-group market that serves about 800,000 residents shut down after Mr. Patrick kicked off his re-election campaign by presumptively rejecting about 90% of the premium increases the state’s insurers had asked regulators to approve. Health costs have run off the rails since former GOP Governor Mitt Romney and Beacon Hill passed universal coverage in 2006, and Mr. Patrick now claims price controls are the sensible response to this ostensibly industry greed.

Yet all of the major Massachusetts insurers are nonprofits. Three of largest four—Blue Cross Blue Shield, Tufts Health Plan and Fallon Community Health—posted operating losses in 2009. In an emergency suit heard in Boston superior court yesterday, they argued that the arbitrary rate cap will result in another $100 million in collective losses this year and make it impossible to pay the anticipated cost of claims. It may even threaten the near-term solvency of some companies. So until the matter is resolved, the insurers have simply stopped selling new policies.

A court decision is expected by Monday, but state officials have demanded that the insurers—under the threat of fines and other regulatory punishments—resume offering quotes by today and to revert to year-old base premiums. Let that one sink in: Mr. Patrick has made the health insurance business so painful the government actually has to order private companies to sell their products (albeit at sub-market costs).

The article goes on to explain how Mr. Patrick’s own Attorney General has come to the conclusion that health insurance premiums aren’t going up because the insurers are greedy. No, they’re going up because medical treatment is expensive. Gee, why didn’t someone think of that sooner?

Also note that people are gaming the system. They’re waiting until they need care before they purchase policies, then after they’ve received that care they drop the policies. The fines the federal government will levy for failing to buy coverage are small compared to paying for insurance for a family for a year. They’ve incentivized gaming the system. Look what’s happening in the one state of Massachusetts, and then imagine that mess on a national level.

Just remember when it all comes crashing down to thank a Democrat.