Is Obamacare Collapsing In Minnesota?

Obamacare in Minnesota is called MNSure. The state had the usual problems (worse, I believe, than in most states) getting its system and its web site up and running. Once the enrollment period got underway, the dominant insurer turned out to be PreferredOne. Reportedly offering the lowest premiums in the nation, PreferredOne signed up nearly 60% of all MNSure participants. So it was a bombshell when PreferredOne announced earlier this week that it will no longer participate in the state’s exchange, saying that “continuing to provide this coverage through MNsure is not sustainable.”

It seems a foregone conclusion that this will lead to higher premiums, at a minimum. PreferredOne’s decision also calls into question the economic viability of the Obamacare model. State officials tried to downplay the significance of the dominant carrier’s exiting the market:

A day after a key insurance player announced its exit from MNsure, leaders of the state’s insurance exchange called the move a normal evolution of a competitive marketplace and laid out plans to improve the upcoming enrollment period for both consumers and brokers. …

[MNSure CEO Scott Leitz] reiterated that he “fully anticipated” that plans would change from year to year.

“It is a competitive marketplace,” he told the board, “and we don’t pick winners and losers.”

Under Obamacare, you could say that the government only picks winners. Through 2016, taxpayers will subsidize insurance companies’ losses. Such subsidies were considered necessary to induce carriers to participate in the government-sponsored exchanges, despite the likelihood that the risk pool on the exchanges would be unfavorable. The fact that a company with 60% of the Obamacare exchange market considers the business unsustainable, even with federal subsidies, is ominous.

In Minnesota, PreferredOne’s decision will probably continue to reverberate. Individuals with PreferredOne policies purchased on the exchange will see those policies automatically renewed, unless they do something different. The catch is that, with PreferredOne no longer participating in MNSure, those people will no longer be eligible for Obamacare subsidies, so they will see premium increases–in many cases, huge ones.

This sort of thing will keep happening for years to come. Democrats are smugly telling reporters that Obamacare is now an established fact and we should all get used to it. In reality, the law is like a series of bombs timed to go off as various deadlines kick in. Ultimately, the awful economics of the law can’t be denied. Premiums and deductibles will rise, and coverages will shrink, insofar as they are able to given the law’s expansive and sometimes irrational mandates. By 2017, when the federal government will stop reimbursing insurance companies’ losses, premiums will be far higher than when Obamacare went into effect. The Democrats apparently hope that no one will notice. To me, that seems unlikely.

The Minnesota PreferredOne story doesn’t appear to have gotten any national attention, which makes me wonder whether similar developments are occurring around the country, each one only a local news story. Obamacare may be crumbling, one state at a time.

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