Monday, May 17, 2010

Prepare to be shocked, Massachusetts-style

After Governor Deval Patrick refused to allow the Bay State's health insurance companies to raise rates to counter the runaway cost of MassCare, they've now reported huge losses:

The state's four biggest health insurers today posted first-quarter losses totaling more than $150 million, with three of the carriers blaming the bulk of their deficit on the Patrick administration's decision to cap rate increases for individuals and small businesses.

Blue Cross Blue Shield of Massachusetts, the state's largest health insurer, reported a $65.2 million net loss for the three months ending March 31. Its operating loss was even steeper, $95.5 million. The company drew $55 million from its reserve to cover the anticipated losses from the state-imposed premium cap in the second quarter, accounting for the majority of its operating loss.
Since MassCare is the model for Obamacare, get ready for a multiplication of problems. Here's Megan McArdle:

There's a depressing possibility, even a likelihood, that this is our future. It's hard to simultaneously expand demand, while lowering the incentives for supply (i.e. Medicare reimbursements), without having some pretty dramatic mismatches between the two. There's an old adage common in restaurants and engineering that goes "Good. Fast. Cheap. Pick Two." Change that middle word to "Universal" and you've got a pretty good summation of the problem that Massachusetts now faces--and that the rest of us soon will.
Oh boy.


Ed G. Mann said...

The question is who is dumber, the companies or Patrick.

I'd guess the companies for staying in MA. Fold the hand and leave. Don't write new business and drop all old business as it comes up for renewal. Any policy lapses, bub-bye.

Anonymous said...

Yeah! Everyone should GO GALT! Starting with entrenched business and industry! That'll show... somebody.

The phrase "put your money where your mouth is" springs to mind. Until then, you might want to take the companies' public boo-hooing as the companies' public boo-hooing.

Ed G. Mann said...

As to that, the doctors in Texas are dropping out of the Medicare program at a high rate. Mostly primary care docs, which are the ones most needed are the ones leaving.
Got to love it when the Obama plan comes together.

They'll be shaking bones at each other and dancing with snakes to get rid of cramps. But the costs WILL go down.