By Investors Business Daily
Health Care: The insurance industry must be kicking itself for backing ObamaCare. Several have since posted big losses and it looks like Blue Cross Blue Shield got the losing end of the stick, too.
Fitch Ratings looked at nearly three dozen BCBS companies and found that 23 saw a decline in earnings that totaled $1.9 billion in the first nine months of last year, while 16 had net losses.
Blue Cross Blue Shield of Michigan lost $622 million from January through September last year. Blue Cross plans in Texas, Oklahoma, New Mexico and Montana lost $442 billion. And those in Pennsylvania, Delaware and West Virginia lost $266 million.
Or as Fitch puts it: "Cost and utilization trends from state insurance exchanges from the Affordable Care Act have been higher than anticipated and are the primary drivers of declining earnings."
This is a big deal, given that Blue Cross plans are often the largest provider of individual insurance policies in any given market. The Blue Cross plan in Michigan has more than a third of the exchange market, in Delaware it's more than 80%, and it is almost 90% in North Carolina.
Given their size, these insurers should have had the broadest and most stable insurance pools in ObamaCare. What they found instead was that the young and healthy are avoiding ObamaCare’s overpriced insurance. If the Blues are struggling, how likely is it that the smaller insurers can succeed?
Many of the Blues sharply increased premiums this year, which Fitch says should improve earnings. Plus, the administration is planning to dole out $7.7 billion in "transitional reinsurance" money, which it hopes will keep insurers in the ObamaCare game at least one more year. They also backpedaled on requiring insurers to have a reasonable network of providers in their plans out of fear that those rules would only fuel more premium inflation.
The law isn't getting any more popular with the public, either. An AP poll found that just 26% say they support the law, vs. 42% who oppose it. And a separate survey by NPR and the Robert Wood Johnson Foundation found that while 15% say the law directly benefited them, 25% said it hurt them.
In short, the stars continue to align for repealing ObamaCare next year, but only if the GOP nominates someone who can win in November.
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