Obamacare: the news from Massachusetts just keeps getting worse

Now that Obamacare has passed, according to Speaker of the House, Nancy Pelosi (D. Ca.), we can see what’s in it. But, rather than try to read all 2700 or so pages of the bill, let’s look at Obamacare in action.

I did a post a few weeks ago about the circumstances facing the largest insurance companies in Massachusetts.  Three of the largest four health insurers posted operating losses for 2009, and, to no one’s surprise, they requested that the state approve premium increases for 2010.  In response to these requests, not only did the state deny the increases, but, Governor Deval Patrick has insisted that,

price controls are the sensible response to this ostensibly industry greed.

Before you buy into the Governor’s argument about “industry greed’ you need to know that each of these three insurance companies is a non profit. 

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.

So, each of these companies have simply stopped selling new policies.  In response, the state has ordered them to continue selling new policies, at last year’s approved premium rates, or face fines.  Interesting…last year’s rates caused the companies to lose money, and under threat of  fines, the companies must continue to use those rates, thereby incurring additional losses for 2010.  Maybe the fines would be cheaper than the eventual losses.

One irony is that Mr. Patrick’s own Attorney General and his insurance regulators have concluded–to their apparent surprise—that the reason Massachusetts premiums are the highest in the nation is the underlying cost of health care, not the supposed industry abuses that Mr. Patrick and his political mentor President Obama like to cite.

But, it gets better.

Massachusetts (as will Obamacare) requires that insurance companies must insure anyone, regardless of their physical condition at the time, and, that the “sick” can not be charged a higher premium than the healthy.  So, people are ignoring the mandate that they must have insurance,  only purchasing insurance when they get sick, and dropping coverage when they are healthy again.  The Harvard Pilgrim health plan reported that,

[b]etween April 2008 and March 2009, about 40% of its new enrollees stayed with it for fewer than five months and on average incurred costs about 600% higher than the company would otherwise have expected.


This week Blue Cross Blue Shield reported a big uptick in short-term customers who ran up costs more than four times the average, only to drop the coverage within three months.

What does that practice do?  It places insurance companies in the unenviable position of paying out far more in claims for these people than it collects in premiums from these people.  Absent Governor Patrick’s price controls, that drives up premiums for all, thus forcing people to drop coverage until they become sick.  And, the cycle goes on.

Were I a resident of Massachusetts I would be concerned that in the not to distant future there will be no company willing to write health insurance in Massachusetts, as, somewhere along the line, the existing companies will become insolvent.

5 replies
  1. winnifredthewoebegon
    winnifredthewoebegon says:

    Great post, SOS!

    I think it should no longer be called "Masscare" but "Massacre"…I'm afraid that the industry will get too overpopulated with people who only need short term insurance and will "capsize" under the weight of reimbursement costs. (sorry…had to make the reference…LOL)

    Have a GREAT (!!!) day!  :o)

  2. weregettinghosed
    weregettinghosed says:

    Massacre is right. But they are doing it to themselves, they asked for it, they wrote it and now their words are coming home to roost ……

    Everything happens for a reason, this maybe just what people need to see, the downfall of MA. healthcare  – otherwise now known as Massacre plan – it will show the people what is about to happen to the US as insurance companies bail out of falling profits and bigger debts as their payouts to claims are not offset by premiums rather they are so far off balance to put the companies flat lining —- so the only humane thing to do is to put them out of their misery.

    Once the people see they have nothing to buy for health care – and they all begin to scream to the government —"what do we do? What are you going to do now?" Maybe, just maybe the people will realize – hey wait a minute – who murdered the insurance industry? — the government! So why ask for their help?  Ah – with eyes wide open as you look your murderer in the eyes -ohhhhh —– dearrrrrr – maybe the people will start to run in the other direction and discover how once again to help themselves. It worked for 200 years, it will work again.


  3. donh
    donh says:

    Great comments Winnie! Howie Carr had on as guest the republican Goobernatorial candidate Charles Baker , former head of Harvard Pilgrim Healthcare. He summed up the crisis bottom line ….people gaming the system. People  sign up for insurance only when an elective proceedure is needed and then drop the policy a couple months later.

           Also a problem , the plan as written lumped 1-5 people groups  in with small companies up to 50 employees. Most of the gamers are in the 1-5 people groups  which passes the cost of insurance fraud onto legitimate employers. Yet another problem , the insurance has to include prescription drugs. People cannot have a basic policy and pay for whatever prescriptions they may need out of pocket over the counter.

  4. Rick from Ellington
    Rick from Ellington says:

    This is exactly what Obamacare is all about. It was set-up to fail. And what we are seeing in Mass is what the federal program will be all about. Either the insurance companies will all fail, leaving the only option a single payer government run program, or they will have to raise rates so high to pay for the gamers and for those that will overuse the system that the liberals cry foul and change it all to single payer system. It is why they didn't include any cost reform in the bill. It was never about health care reform, but about setting up a system that would drive the insurance companies out of business.

  5. Dimsdale
    Dimsdale says:

    Notice how MA requires huge infusions of cash to make it look viable, particularly while the Dems are trying to sell this to the American people.  But who is going to prop up a federally mandated program?  Where will all the people fleeing other socialistic "cures" for medicine going to go to get actual and timely care?  Better yet, where are we going to run?

Comments are closed.