Blue Cross Blue Shield Association Confirms Obamacare Death Spiral

CAM00109The Blue Cross and Blue Shield Association, which represents 36 Blue Cross and Blue Shield plans covering 105 million Americans has released a study of its members’ claims data in Obamacare exchanges 2014 and 2015. It confirms Obamacare exchange enrollees are sicker and more expensive than enrollees in pre-Obamacare individual plans or employer-based plans:

Members who newly enrolled in BCBS individual health plans in 2014 and 2015 have higher rates of certain diseases such as hypertension, diabetes, depression, coronary artery disease, human immunodeficiency virus (HIV) and Hepatitis C than individuals who had BCBS individual coverage prior to health-care reform.

Consumers who newly enrolled in BCBS individual health plans in 2014 and 2015 received significantly more medical care, on average, than those with BCBS individual plans prior to 2014 who maintained BCBS individual health coverage into 2015, as well as those with BCBS employer-based group health insurance.

The new enrollees used more medical services across all sites of care—including inpatient admissions, outpatient visits, medical professional services, prescriptions filled and emergency room visits.

Medical costs of care for the new individual market members were, on average, 19 percent higher than employer-based group members in 2014 and 22 percent higher in 2015. For example, the average monthly medical spending per member was $559 for individual enrollees versus $457 for group members in 2015.

These health plans have not done a great job containing costs in employer-based health plans either. Those policies’ average monthly health spending increased 8 percent in the first nine months of 2015 versus 2014. However, costs in individual policies increased 12 percent, half again as much. This means the gap in medical spending between the two markets is increasing.

It is understandable that the newly Obamacare insured would be more expensive than those in employer-based group plans or the pre-Obamacare individual market. Under Obamacare, people can get coverage without underwriting for health status. So, the sicker people showed up for coverage under Obamacare.

What is surprising is that the problem got worse in the second year of coverage. When combined with enrollment data showing one quarter of Obamacare enrollees in 2015 dropped out during the year, this supports the case that Obamacare exchanges are not the properly functioning health insurance markets the president promised in 2010, but effectively just pools for very expensive patients who sign up when they think they will need care and then drop out after consuming it.

Comments (14)

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  1. Bob Hertz says:

    At my insurance agency, many of the enrollees who “dropped out” during the first year were caught up in paperwork snafus involving the exchanges and the insurance companies. They never got a bill for their insurance, or they found they signed up for a bad plan, etc etc.

    Actually I suspect the dropouts were healthier on average, that is why they did not try and fight through the bureaucracy to establish their coverage.

    People in poor health from chronic conditions do not have just one episode of illness…I suspect John exaggerates the number who ‘got insurance for one illness’ and then dropped it.

    • Ron Greiner says:

      Bob, you say, “They never got a bill for their insurance, or they found they signed up for a bad plan, etc etc.”

      So you think that the lapsed rate went up at your agency because you were selling them bad plans?

      I know a large group of people who had a $9 premium after tax credits had no checking account so how are they going to pay their $9 a month? ANSWER, they don’t and you have a lapsed policy.

      The first couple of years of Obamacare these broke people were valuable with tax credits but now the insurance companies are terminating agent commissions so their value is greatly diminished.

      • PJohnson says:

        Who can’t swing 9 bucks a month? Answer: no one. Instead they bought a 6 pack and a pack of cigarettes.

        • Ron Greiner says:

          PJohnson, you miss the point of electronic funds transfer.

          Besides, a 6-pack of beer and a pack of smokes costs more than $9.

  2. Barry Carol says:

    Bob – When current Massachusetts governor, Charlie Baker, was CEO of Harvard-Pilgrim Healthcare, he wrote about this phenomenon after Romneycare was implemented. There were numerous instances of people who would sign up for insurance under guaranteed issue to cover the bills for a pregnancy in progress. Others who needed a hip or knee replacement or other specific expensive procedure would sign up for insurance then drop it after they got their care and then recovered. Baker said the medical loss ratio attributable to the people who gamed the system like this was 600%!! It probably wasn’t a huge number of people as a percentage of the total number of policies in force but it didn’t need to be to have a significant adverse impact on the bottom line. As a non-profit, HPHC’s normal profit margin was about 1%.

  3. Devon Herrick says:

    I would expect pregnancy to be among the most common join and drop conditions. Like Barry, I can imagine other single ticket items like hip replacements, liver transplants, cancer diagnoses, maybe even heart disease where the doctor says a bypass is needed.

    Many disease conditions may not follow this model but I can see a tipping point where one new problem prompts the desire for coverage that wanes after a few months of treatment.

  4. Ron Greiner says:

    —this supports the case that Obamacare exchanges are not the properly functioning health insurance markets the president promised in 2010, but effectively just pools for very expensive patients who sign up when they think they will need care and then drop out after consuming it.—

    BINGO – no personable responsibility. Consumers are confused and they will think in the future – Why buy health insurance while I’m healthy because if I do get sick I can enroll then and have somebody else pay all of my medical expenses – no questions asked.

    Of course this is faulty thinking but when health insurance premiums are $20,000 a year per family people will want to believe that their sickness will not be urgent and that they can gamble.

    Devon, you can just tell your wife to blow off the health insurance expense and pretend you live in Canada and it would take 6 months before you could be treated anyway living under Socialism. That drops those Canadians’ cost when the people waiting for heart surgery die on their waiting list.

    In the future the High Risk Pools should cost more than medical underwritten plans so people exercise personable responsibility and have insurance because if they gamble and wait till they get sick it will cost twice as much, like Obamacare does now.

    We now know that paying TWICE as much for health insurance in the 21st Century is a heavy burden. So think twice before marrying a girl like my daughter.

  5. The Big Ham says:

    You guys are just so confused:) Do you actually think the exchanges are following the law? Ha Ha Ha ha good one. I just talked to a person today who was on a short term plan and his plan terminated 3/28/2016. This person needs to have neck surgery because of a bulging disk. He can not go back on a short term with out a pre existing. Short term plans are not ACA qualified so even though he lost insurance in the last 60 days he should not qualify for a special enrolment. Not so fast my friends. He went straight to checked the box that says did you lose your insurance? Because he just lost it he checked yes. Presto!!! says you qualify to buy a plan. He has a plan going into effect 5/1/2016 plans on having surgery and as soon as its done Drop it like a sack of potatoes.
    The Administration is so desperate to sign people up nothing is being verified. Even if they tried to verify the client has a letter from the insurance carrier that says his insurance ended 3/28/2016. Do you really think a Navigator with all of there insurance knowledge would not accept that letter as proof of lost coverage?

    Hillary for president. If the plan is to bankrupt the country lets go down in style!!!

    • Ron Greiner says:

      Good, the insurance industry (BCBS) jumped in bed with the Obama Administration and now they have figured out that they are in bed with a vampire that will suck them dry!

      So, if you get cancer get a Short-Term-Medical (STM) with a 30 day term so that will qualify you for Obamacare, nice.

      The STM won’t pay cancer expenses for 30 days but there is no perfect free lunch.

  6. Bill Robertson says:

    It is not May 1 yet. If someone is inaccurate with their information when they apply on the system will not catch this on application. The same as when someone understates their income and receives a larger subsidy than that for which they qualify; but it does catch up when they file their taxes. When the insurance carrier asks for verification of loss of coverage the inaccuracy will be evident. Even if there is a delay beyond 5/1 and somehow the surgery is performed, the claim will be reversed and the hospital will come after the patient with vengeance. You get cancer, and apply for short-term after being diagnosed, you have to lie about your health. Read the HIPAA rules on insurance fraud, 10 years in prison and/or a $250,000 fine are big risks. Once a few people get caught and punished, the aggressive strategies described will cease. And is this what someone wants on their record…Charged with Fraud… How will that impact future job opportunities?

    • Ron Greiner says:

      Bill, I’m with you. I have had way too many consumers waste my time and lie to me on an insurance application and then they get declined. So, you think I should turn them into the HIPPA police and hopefully they can do some prison time, I like that.

      I have never heard of a customer getting in legal trouble for lying to an insurance agent.

  7. The Big Ham says:

    Why by 30 days. Some will let you just by 14 day coverage.

  8. Bill Robertson says:

    If a broker helps someone they know is not being accurate, the broker is in trouble for facilitating deception and can loose their license. If the broker accuses someone of fraud the broker better have airtight evidence the intent was fraud or they are being slanderous. I tell people who are being aggressive the risks, that I will not be party to this, and they either agree with me or go somewhere else. At this point once I explain the whole story, I have not had anyone intentionally lie. Most of my clients have other assets that they do not want to put at risk.