I can’t really say I predicted this, since I more or less just added a quick dose of my opinion to a post the other night by stating the obvious: “rates will either have to increase, or insurers will cede the field. Neither is a good choice, but that’s where we are going.”
But reports yesterday stated that Aetna, a leading Maryland health insurer, is indeed pulling out as it was denied the rate increase needed to stay profitable in Maryland given the uncertainty of the state’s insurance situation. While those who hold policies through Aetna may be able to continue on, a significant portion will have to shop in the newly-created state exchange at a time when rates are much more expensive – up to 83 percent, according to a release put out by gubernatorial hopeful David Craig:
Craig announced today that Marylanders can expect a dramatic increase in health care insurance premiums under Obamacare, calling it a “massive new tax.” Maryland’s least expensive Obamacare plan will be 83% higher than the lowest-cost plan sold in the state this year. The analysis comes from a Government Accountability Office report that compares rates this year to what the Maryland Insurance Administration announced they will be under the new state exchange scheduled to launch October 1.
The state’s insurance agency locked down rates with private carriers last month and the new exchange for individuals is marketed as the “Maryland Health Connection.”
“What we have here is Maryland’s health disconnection,” said Craig. “This entire contraption will fall apart unless untold thousands of healthy people inexplicably decide to go online and buy expensive insurance instead of making a car payment. Private insurance carriers are not participating and not enough healthy, working people will either, and this is not going to work.”
Craig also commented on the Aetna situation.
It is deeply troubling that Maryland has yet again soured relations with major employers and job creators. Another company acquires one of Maryland’s last remaining Fortune 500 companies and takes their business elsewhere because regulators tell them what to charge. This irony is lost only on the one-party political machine in Annapolis.
Fellow gubernatorial candidate Ron George also weighed in:
This insurance exchange is already resulting in expensive rate increases for cash-strapped Maryland families. Maryland currently has one of the lowest discretionary income rates in the country, and this exchange will take more money away from your family vacation, school funds and holidays.
Noting that the exchange, which is supposed to increase competition, is comprised of just seven companies owned by only four separate entities, George went on:
This is a classic example of the Democratic machine in Annapolis picking winners and losers based on political relationships instead of free market realities. Additionally, the higher costs to businesses will lead to less job creation. Also, many physicians are now considering earlier retirement.
Perhaps the biggest problem with the exchanges is the broad coverage they have to provide. Marc Kilmer of the Maryland Public Policy Institute illustrates this well in a recent Baltimore Sun op-ed, pointing out that:
To be fair, the lowest-cost plans for sale today are not the same as the lowest-cost plans that will be sold in the exchange. The exchange plans will be much more comprehensive. Many of the cheapest health insurance plans available for sale in the individual market today have high deductibles and may not cover as many situations as do the other plans. But that’s not a bad thing — it gives Marylanders choices in prices and in how much risk they’re willing to carry themselves or put on the insurer. For most Marylanders, the cheaper plans are excellent choices, but for some Marylanders they’re not.
Currently, you can also buy both the cheap plans and the comprehensive plans in the individual market. But you won’t have the choice to buy high-deductible, low-cost plans in the exchange. You have to buy a plan that is designed by bureaucrats and politicians in Washington and Annapolis.
These plans basically come as a one-size-fits-all, take it or leave it proposition with a limited variety of choices – remember, there are only seven approved players in the game, and just four if you consider just the separate entities. Vanilla, chocolate, strawberry, and butter pecan might be great for most, but if you prefer cookie dough like I do you’re out of luck.
And what happens when the exchanges only have six insurers? Or three? Unless new entries can figure out a way to make a profit, they’re not going to get into the game. Perhaps they can build wind turbines on the side to gain the state’s favor?
The point is our system was flawed, but the solution is equally (if not more) flawed because of the heavy hand of government. Why not come up with some true free-market solutions – for one, allowing insurance to be sold across state lines so we can buy a policy out of a state with fewer mandates – and let the market dictate its direction? Not in Martin O’Malley’s and Anthony Brown’s Maryland.