Perhaps the single largest news story to appear on my newswire this morning was Blue Cross Blue Shield’s announced changes to it’s ACA (Affordable Care Act) Plans for 2016. Most specifically of interest is in regard to the revised rates and changes to the availability of thier Blue Advantage and Blue Select products.

The news release begins, “Contrary to industry expectations, ACA customers continue to be unhealthy and use more health care services than expected. Blue Cross and Blue Shield of North Carolina’s (BCBSNC) data shows that ACA (Affordable Care Act) customers use expensive services for chronic conditions and visit the emergency department in high numbers.”

Please tell me what industry source thought it was reasonable to expect that allowing individuals, without regard to pre-existing conditions, could buy health insurance and anticipate there would be no effect on premium rates over time?  Ladies and gentleman, we are seeing REAL and SUBSTANTIATED proof that Economics 102 remains solidly intact, depite all the rhetoric from the pundits and talking-heads who told us otherwise.

When a carrier is forced by government to issue polices that insure those with undisclosed and unknown pre-existing conditions from day-one, there is no way for that carrier to predict future claims expenditures. As a result, in the absence of decreasing claims and costs, premiums MUST rise in order to maintain carrier viability and to pay for medical services rendered. Let me say it the way my dad would say it.  “If your ouflow exceeds your intake, your upkeep will be your downfall.” Thus, we see a real life corporate example of ECON102:

Blue Cross goes on to illustrate this in their words: (I’ll put the “code language” in parenthesis)

The company (Big Blue) is taking action (Doing what we have to) to protect the sustainability of products  for our customers (It’s really expensive for us to redesign our products) and our business (We want to stay in business) . We are:

  • Revising rates filed for 2016 (We made a mistake on our first estimate and now we want more)
  • Changing the availability of Blue Advantage® and Blue Select products® (Some people aren’t going to get to keep their current policy after 2016. But wait, that’s not what the POTUS told us) 

What we have learned is the proposed average rate increase for individual plans will be 34.6%. This will impact those polices purchased by those under age 65 on or off the Healthcare Exchange beginning January 1, 2016. That type of increase is reminiscent of those we saw BEFORE the ACA!

Did no one REALLY see this coming before we enacted the ACA in March 2010?  How did we buy into the story?

Do I have a solution for this mess? I have a few thoughts, but that’s not the purpose of this post. What I hope we can all see is that, it is important to have laws and regulations to protect consumers from fraud and unscrupulous behavior by participants in our free-enterprise system. When a government, however, forces the consumer to purchase a product from a third-party and pay a penalty for non-compliance, and said third-party has no way to manage it’s ongoing expenses versus it’s revenues, then that is a sure recipe for disaster.

So, there in 3-D display, we see in it’s full glory the long-awaited and much revered Obama Care. As we enter into a new election season, let’s not forget how we got here. Polical postering from BOTH sides is not the solution.  Listen to your common sense. For the sake of this great nation, please wake up America!