How to game Obamacare

How to game Obamacare

Liberals are suddenly everywhere claiming that the GOP’s “worst nightmare” is coming true: ObamaCare is working, premiums are rising only modestly or even falling, and more insurers are choosing to participate. But this new optimism papers over some unusual market dynamics that suggest a business strategy to game ObamaCare’s rules.

The Health and Human Services Department released preliminary findings last week showing that 77 insurers will offer ObamaCare plans for the first time across 44 states, amounting to a 25% expansion year over year. Some insurers have quit—such as the Preferred One insurer that gained the largest membership on the Minnesota exchange and sold the lowest-cost policies—but on net there are five times as many new entrants as exits. So HHS lauds the exchanges as “an increasingly attractive business opportunity.”

That may be, but the contradiction is that rates are falling at the same time, so the exchanges should be less lucrative to the insurers’ bottom line. What seems to be happening is that the market leaders are raising premiums by high single digit percentages and new insurers are trying to gain a pricing advantage.

 

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