WINhealth Loses Under Obamacare: A Cautionary Tale

by Charles Katebi

With just a few weeks until open enrollment, WINhealth has decided to leave Wyoming's health insurance exchange. The insurer hoped that Obamacare's federal bailout fund would pay for its losses. However, it only paid insurers a fraction of what it promised. Wyoming legislators rejected Medicaid expansion last year because they worried the federal government would renege on its promises and here is a prime example. Insurers have found out the hard way the federal government can't be trusted. Let's hope it is a lesson learned by legislators still pushing for Medicaid expansion.

Obamacare foists enormous costs on insurers. For starters, they must offer insurance to anyone who wants it, regardless of health status. Insurers must also cover a range of expensive Essential Health Benefits. These include maternity care, pediatric service, and prescription drugs.

To help pay for the costly mandates, Obamacare established a slush fund, or Risk Corridor, to bailout struggling insurers. Carriers with larger than expected earnings have to contribute half of their profits to this account to compensate those that earned significantly less than expected. Like all government spending schemes, the federal government claimed it would make money for taxpayers. The Congressional Budget Office estimated this fund would generate $8 billion in savings to taxpayers over three years.

But not many insurers are profitable under Obamacare. Out of $2.87 billion in aid insurers requested, the fund could only pay out $362 million, according to the Center for Medicare Services. Without this bailout fund's support, insurers now face millions in losses, and some have stopped selling insurance for good.

The insurer WINhealth was hit particularly hard by this broken promise and has decided to leave Wyoming's insurance exchange. The company expected a $5 million payout but received a mere $600,000. Stephen Goldstone, the company' president and chief executive officer, laid the blame squarely on Obamacare's broken promises:

"The federal government's decision to significantly reduce the reimbursement we would receive under the risk corridor program came as a complete surprise to WINhealth, This, combined with the continuous delays in repayment, has caught WINhealth flat-footed with no choice but to turn down participating in the exchange for 2016."

With WINhealth gone, Blue Cross Blue Shield is the sole insurer on Wyoming's exchange. BCBS is now free to raise premiums knowing patients have nowhere else to turn to for insurance. They will also undoubtedly increase premiums now that they know the federal Risk Corridor program cannot be relied upon to cover their losses.

The Obama Administration's announcement shouldn't surprise anyone at this point. We have been consistently mislead by Obamacare's promises. During the 2008 election, then-presidential candidate Barack Obama boasted his healthcare plan would reduce annual premiums by $2,500 for a typical family. Instead, premiums for the average family rose $708 in Wyoming according to the Heritage Foundation.

Then, as Obama was pushing his healthcare law through Congress, he reassured voters "If you like your healthcare plan, you will be able to keep your healthcare plan, period." Wrong again. 4.7 million patients saw their plans cancelled because they were in violation of Obamacare's onerous regulations.

Obamacare's broken promises holds important lessons for Wyoming's legislators in 2016. Governor Mead recently announced he will try yet again to expand Medicaid, claiming the federal government will pay 90 cents on the dollar for the program. Senator Charlie Scott warned his colleagues during last year's legislative session of the perils of trusting the federal government:

"You know the federal government is going to back off of its promise to pay 90 percent. You know that because when you look at their finances, they're in bad trouble across the United States."

If the federal government can't manage a meager $3 billion insurer bailout fund, why should we trust it to fully fund the $500 billion Medicaid program? Patients, insurers, and taxpayers have been misled at every turn under Obamacare. Our legislators must stand firm and again reject Medicaid expansion in Wyoming.