August 17, 2016

TRAIN-WRECK UPDATE: Aetna’s Retreat From Obamacare Is More Than It Seems.

Bigger insurers gain more pricing power against rapidly consolidating provider networks. They also gain more pricing power with customers. Industries dominated by a few major players are not, in general, known for their high quality and low costs. Allowing the mergers to go through could stave off the immediate problem with the Obamacare exchanges at the cost of raising insurance costs for everyone else — and giving Democrats big headaches in 2018 and 2020.

The calculation is further complicated by the fact that the exchanges and the mergers are regulated by different agencies. Health and Human Services ultimately oversees exchange operations, while the attorney general is the one trying to block the mergers. They both work for the same president, of course. But it would not be the first time that internecine battles between different parts of the same government further complicated an already complicated game.

Whatever the truth of the matter, and whatever the outcome, we can expect to see a lot of such quandaries going forward. The exchanges do not seem to be stabilizing; instead, they seem to be growing more unstable over time, particularly outside large urban areas where there are enough providers and slack capacity in the health-care system to provide some check on the problems that have plagued insurers elsewhere.

Insurers cannot simply go on eating those losses forever. They certainly won’t do so for free. Unless the exchanges get a rapid infusion of healthier customers who pay substantial premiums without using much care, insurers are going to keep pulling out of the areas where they are losing money. Or at the very least, they will demand benefits from the government to make it worth their while to stay.

Well, ObamaCare was always meant to fail and lead to single-payer government healthcare. Related: Colorado’s Single-Payer Health Care Would Die a Fiery Death.

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