ObamaCare’s adverse selection: Anybody remember the Mariel boatlift?

First, for all of you youngsters, some background …

The “Mariel boatlift” was a mass emigration of Cubans who departed from Cuba’s Mariel Harbor for the United States in 1980.

image

The Mariel boatlift was precipitated by a sharp downturn in the Cuban economy which led to thousands of Cubans badgering the government to allow them to leave and seek asylum in the U.S.

Previously, the Communist government maintained closed borders – in and out.  Citizens weren’t allowed to leave.  Think, Berlin Wall.

Then, suddenly, the Cuban government announced that anyone who wanted to leave could do so, and an exodus by boat started shortly afterward.

At first, President Carter – reading the move as a humanitarian gesture – opened the U.S. borders to the emigrating Cubans.

Then, Fidel Castro seized the opportunity to load the boats with convicted felons from Cuban jails and patients from Cuban mental health facilities.

When Carter caught on, the Mariel boatlift was ended.

By that point, as many as 125,000 Cubans had made the journey to Florida.

Estimates vary widely re: what portion of the the exiles who made it to U.S. shores were hardcore criminals and very unhealthy patients.

=====

What’s the Mariel boatlift got to do with ObamaCare?

In recent days, several insurers have already blanket-cancelled the policies of hundreds of thousands people.

For example, Florida Blue is terminating about 300,000 policies and Kaiser Permanente in California has already sent cancellation notices to 160,000 people.

Some industry experts estimate that at many as 16 million individual policy holders may face cancellation in the coming weeks. Source

Why are insurers cancelling these policies?

Two basic reasons.

First, some of them have – through no fault of their own – become unprofitable because of ObamaCare.

Simply, the insurers can’t recoup the added cost of expanded coverage – you know, “adult-children’, universal maternity care regardless of age, etc. – in the premiums they charge.

Second, Some existing plans have especially sick participant pools, so insurers want to end them.

You see, some insurers used to write “guaranteed issue” policies.

These are policies that were designed to serve high risk participants –- think, “pre-existing conditions” —  whose especially high health care costs have escalated out of control.

Previously, the companies were contractually bound to the policies.

=====

Here’s the link to ObamaCare …

Since many of the policies don’t conform to ObamaCare requirements – e.g. some of the whacky treatments that are now mandated – the companies now have an “out”.

They have a once-in-a-lifetime opportunity to cancel guaranteed issue policies because the policies don’t conform to the law.

For the insurers, it’s a get out of jail free card.

What about the people who get their coverage cancelled.

No problem, they just get new policies through the ObamaCare exchanges .

OK, maybe at a higher price because of the expanded coverage.

Oops.

That is,  they get policies through the OC exchanges … if the exchanges ever get up and running properly.

What if ObamaCare gets delayed for a few months or more?

Bad news for the folks who have been cancelled … they may be uninsured for awhile … until ObamaCare is up and running.

Think about that for a moment.

Some of the country’s least healthy people — who previously were insured — will suddenly be uninsured.

Double oops.

That’s called “unintended consequences” … and  eventually “adverse selection” into the ObamaCare insurance pools.

Kinda like the Mariel boatlift.

* * * * *
Follow on Twitter @KenHoma           >> Latest Posts

Tags:

One Response to “ObamaCare’s adverse selection: Anybody remember the Mariel boatlift?”

  1. Robert Ford Says:

    I have heard of this happening but has not been my experience. I live in Ca. and have Kaiser and have been locked in with no opportunity to change coverage because of pre existing conditions. Now I am being offered my same plan but at the ususal double digit increase in premium for next year. The premium jump percentage is less than average for next year. For a family of 4 I will be paying 2500 per month. I am also being offered several Platinum plans with both Kaiser and other insurers for less money. Blue shield Platinum PPO is 1800 a month and Blue Cross is 1900 a month. This is the first time ever that my premiums have had the opportunity to go down for similar coverage.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s