Cooper: Breaking even would be a plus

The HealthCare.gov website, where people can buy health insurance through federal exchanges, is displayed on a laptop screen in Washington.
The HealthCare.gov website, where people can buy health insurance through federal exchanges, is displayed on a laptop screen in Washington.

Although the annual scenario begins to sound like a broken record - perhaps something hideous by Milli Vanilli - it is important to again note the rate increases insurance companies must ask for to pay for the health care coverage they offer through the federally run Affordable Care Act exchanges.

Their goal, of course, would be to get to even for the year - to have the insured pay premiums that would equal what they dole out for services to doctors and hospitals. But in doing so, they must determine what they can charge subscribers to keep their business.

Figuring it out is no easy feat, as insurance companies are happy to tell you. And they also admit they haven't come close in the first four years of the ACA exchanges.

Six years of smoke and mirrors after the Affordable Care Act was signed, President Barack Obama's promises of lower premiums, the ability the keep your plan if you like it and the ability to keep your doctor if you choose should never be forgotten.

Lower premiums never happened for the great majority of insured Americans (and if they did, they were short-lived), many insurance plans have gone by the board and a large number of patients were not able to keep their doctor.

So, as insurance companies approach state regulatory officials this year, BlueCross BlueShield of Tennessee will seek an average 62 percent increase on premiums sold through the federal exchanges. Humana will ask for an average 29 percent boost, and Cigna is requesting a 23 percent jump.

It's not just a Volunteer State problem, though.

Humana of Georgia will ask its regulators for a 65.2 percent bump, and Highmark in Pennsylvania will seek to increase its rates 34.4 percent.

When the Affordable Care Act was created, it was assumed younger, healthier people would only be too glad to pony up for relatively inexpensive plans - especially when federal tax credits cover most of the cost to pay for the older, sicker people.

Of course, the plan made no sense to begin with, as a few Obama officials now have privately acknowledged, because it would take purchases by practically every last healthy, young person - and more - to pay for the services needed by older, less healthy people. And young people decided not to opt in in droves, even being willing to pay a fine instead of getting the coverage.

It's also not surprising that exchange members - in general, the less healthy ones - use more health care services than those who have employer-sponsored coverage. According to Blue Cross figures, exchange members use 22.6 percent more services, averaging 24 claims in 2015 compared to 31 for those with employee-sponsored coverage.

Many of the less healthy exchange members, after all, either could not afford coverage before or were denied it because of pre-existing conditions.

Tennessee Insurance Commissioner Julie Mix McPeak saw the continuing trend in January, telling state senators she expected the premium requests for 2017 to be high because the exchange members tended to be sicker.

If insurance companies existed only for their Affordable Care Act business, they wouldn't be long for the world because no company can sustain heavy losses year after year.

Blue Cross, for instance, has acknowledged it lost $311 million in the first two years of the exchanges, continued to lose money after raising rates 19 percent in 2015 and will show further losses after increasing premiums 36.3 percent this year.

Fortunately for the company, it did better on its other lines of business and fared even better on its investments. According to figures supplied by the locally based insurer, it lost $21 million in operations last year but earned $27 million in investments for a net gain of $6 million.

Insured individuals may want to tell Blue Cross "to cry me a river" over $6 million, but the company's unassigned reserves actually fell by nearly half in 2015 as compared to 2014 when its Tennessee Department of Commerce and Insurance-required reserves increased.

Insurance companies don't exist to lose money, nor should they. And they don't have to be a part of the federal exchanges if they don't want to. But many bought into the Affordable Care Act in order to generate business, hoping they could at some early point turn a profit on the exchanges.

Meanwhile, the Obama administration, having wrought an unworkable system, goes merrily along its way, only too happy to let the insured complain about rate hikes to the insurance companies who would salivate to break even on the exchanges.

Americans, though, should not forget how we got here.

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