[Whew - That title really rolls off the tongue. FoIB and Blue Cross economist Michael Bertaut recently tweeted a series of posts explaining what has gone off the rails, and why. He's graciously granted us permission to post it here as a service to out readers]
As an economist for a Blue Plan, I can help; here are some of the impacts of the ACA on our organization and products since passage on 3/23/2010:
As an FYI, I've been in my role at at BCBSLA since 2004. Between 2010 and the actual ACA launch, we spent over $100,000,000 in new spending just on compliance work and building the systems to allow us to participate. This is money that could have bought actual health care. Pre-ACA we served an individual market with the following characteristics:
125,000 people
Average age 36 years
51% female
Average duration of 47 months [ed: how long folks kept their plans]
Average rate of $274/month
Average annual deductible $750
PPO broad network
Application rejection rate of 0.4% [ed: oh, the uninsurability cirsis!]
Fast forward to 2017:
165,000 people
Average age 46 years old [ed: 30% increase; older ~ sicker]
58% female [ed: more expensive claims]
Average duration 11 months [ed: one can see where this is heading...]
Average rate $725/month [ed: looks like Michael misspelled 3000% decrease]
Average deductible $3,500
Standard plans cover 40% of Medical providers (down from 95%) [ed: hello narrow networks!]
Rejection rate 0%
Only 40% of policyholders keep their plan for 12 premium payments in a row. [ed: let *that* sink in]
Despite huge rate increases and tight MLR restrictions our Individual block went from slightly profitable to -$250 million since 2014.
Oh, and now 52% of our individual customers qualify for $0 ATC/CSR. If there is a better way to wreck a market than the ACA, I haven’t found it yet.
Wondering why this happened? It’s actually 3 really bad policy decisions that have led us here:
■ The politically-determined (NOT economically-determined) age rating policy
■ The “federalization” of plan design which assumes states with $80,000 average annual household income will have same opportunity as states with $40,000.
■ And the real tragedy, repairing and creating stable insurance markets is hampered by lying politicians
Thanks, Michael!
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