California Just Gave Us a Glimpse of How Obamacare Will Fail – Money Morning

Turns out no one knows how Obamacare will work – not even the big-name insurers.

And now, we’re starting to see the effects of uncertainty.

Today (Thursday), the Los Angeles Times reported that United Health, Aetna, and Cigna have opted out of the California insurance exchange.

UnitedHealth has adopted a wait-and-see policy: “We are simply taking the time to carefully evaluate and better understand how the exchanges will work to ensure we are best prepared to participate meaningfully in their development,” explains a spokesman to the LA Times.

Cigna resolved to participate in exchanges in only half of the 10 states where it sells individual health policies, and California didn’t make the cut.

Aetna referred LA Times’ questions to Covered California, the state agency in charge of implementing Obamacare.

That means millions of Californians who will have to choose health insurance from exchanges or face a penalty will not be able to pick plans from those three big insurers – signaling limited options ahead thanks to Obamacare.

UnitedHealth, Aetna, and Cigna’s response to the California exchange is just the beginning.

These three companies are but the first dominoes to fall to Obamacare’s less-than-clear implementation.

Obamacare Facts: More Scary Signs of What’s Ahead

Common sense business practice dictates that insurers will participate in those exchanges which guarantee them the highest certainty of success – namely, the states where they can profit the most, while making as few changes to their existing products as possible.

Otherwise, you can bet that insurers will sit tight and see how participating insurers fare before they risk their own necks by jumping into an uncertain environment. This results in a lack of competition among insurance companies in individual states.

The billion dollar question is, how will this lack of competition affect ‘We the People’?

History dictates that lack of competition stifles innovation and customer service, while driving up prices. It’s precisely why we have antitrust law in this country, which thrives on free market principles and ideals.

The Examiner compares our new government-regulated health care system with public utilities, citing The Heritage Foundation’s Robert Moffit:

“The characteristics of public utility economics are markets dominated by a few large firms, with low rates of return and captive customers, in which the firms’ pricing power is constrained by government regulation, but government’s exercise of regulatory power is constrained by the need to keep the remaining firms profitable to avoid the widespread social and economic dislocation that would occur should they be driven out of existence. In essence, this is a prescription for achieving market equilibrium through an economic “mutually assured destruction” stand off – with little or no remaining consumer choice or product innovation.”

Our proud American reputation for being top-notch health science innovators is going the way of the handsome jock from high school – gain about 50 pounds, lie on the couch all day and reminisce about the past.

Now, let me paint an even uglier picture…

A study, commissioned by California, came out in March reporting that Obamacare will drive up individual insurance premiums in the state.

Wealthier people could see premiums increase by an average of 30%. Lower income people will be able to offset most of the increase via subsidies. That means the middle class will fall somewhere in between.

Well, so much for lower premiums.

Heck, so much with Obamacare!

For more on Obamacare, check out 15 Obamacare Facts the President Doesn’t Want You to Know

Related Articles:

Money Morning:

Los Angeles Times:

The Examiner:

The Heritage Foundation:

The New York Times:

Milliman Client Report:

Spread it:

Tags: explain obamacare, Healthcare, healthcare act, Healthcare Stocks, highlights of obamacare, Medicare, mother of all obamacare lies, obama obamacare, Obamacare, obamacare facts, obamacare law, obamacare lies still coming, sequester, Sequestration, U.S. Economy

This entry was posted on May 23, 2013 at 4:18 pm and is filed under Money Morning, Must Read. You can follow any responses to this entry through the RSS 2.0 feed.

Sign Up To Receive Free Wall Street Examiner Email Bulletins

Get a "heads up" on these lively, informative commentaries on the latest economic and financial data.

You will receive one or more free e-letters each week featuring an excerpt from a current Wall Street Examiner Professional Edition report or from an exclusive report on current economic data releases to help you to cut through the media spin and give you a clear picture of what's happening  in the markets and the economy.

Thanks for joining me in the search for reason and clarity in this treacherous environment!

Lee

Email Address 

Premium Services for Investors and Traders

The Wall Street Examiner Professional Edition- Stay ahead of the herd.Try the Wall Street Examiner Professional Edition risk free for thirty days.

Radio Free Wall Street - Lee Adler, Russ Winter and Aaron Krowne go behind the paper curtain of Wall Street propaganda. Listen now.

Sign Up

Get the InvestingChannel
Free e-Letter Today

Learn More

Independent market opinion, analysis and ideas - delivered every business day

Premium market opinions, analysis, and ideas - delivered every business day

Editor's Picks