Is Obamacare “Collapse” Just a Ploy?

Hat tip Paul T.

Via CCHF

Is Obamacare actually failing? Some parts, like the 16 failed co-ops, are. But when it comes to health plans dropping out of Obamacare exchanges, it’s a legitimate question. HMOs have a disturbing history of dropping enrollees – until Congress meets their payment demands.

This pattern began after Congress embraced managed-care in 1982. Nine years after the HMO Act of 1973 became law, Medicare added HMOs, described as “risk-based private health plans, or those plans that accept full responsibility (i.e. risk) for the costs of their enrollees’ care in exchange for a prospective, monthly, per-enrollee payment.”

Everything went swimmingly for HMOs until Congress enacted the Medicare+Choice HMO program in 1997 and cut payments. The GAO says nearly 100 plans either terminated contracts with the federal government or fully or partially withdrew as a result. Health Care Financing Review reported HMOs dropped more than 1.6 million Medicare recipients over three years.

Congress capitulated. In 2003, it enacted the more HMO-friendly Medicare Advantage (MA) program. In what some called “overpayments,” MA cost $14 billion more than traditional fee-for-service Medicare in 2009.

Then came Obamacare. HMOs supported the law because it forced all of us into their plans. But then the Supreme Court ruled the individual mandate unconstitutional, the sick enrolled en masse with taxpayer-funded premiums, the young and healthy wisely refused to enroll, and Congress prohibited Obama from bailing out the plans. Now the nation’s largest HMOs are dropping out—but maintaining a toehold. UnitedHealth Group sticks with three of 34 states, Humana keeps 11 of 19 states and Aetna retains four of 15 states.

Why? Because if a plan drops out completely, the law prohibits it from participating again for five years. So HMOs must want to stay. They just want more money. They have nothing to lose by playing hardball. Obamacare eliminated their only real competition – affordable indemnity insurance – and Congress has nowhere else to go.

The tail is wagging the dog. Congress thought it could control the monolithic managed-care industry it created (see “Blame Congress for HMOs”), but Congress has become politically dependent on it. Expect ever-increasing levels of confiscation from taxpayers and policyholders to keep the HMOs happy.

Then again…there is reason for hope.  Last Saturday, I was speaking to a GOP women’s group. As CCHF’s “The Wedge of Health Freedom” expands, managed-care plans will lose power. I asked the audience to speed this up by using our handouts to invite their doctors to Join the Wedge. I am asking you to do the same.

Expanding the Wedge to end the wag,