Killing off the Competition: and the Affordable Care Act

The destructive nature of Obamacare’s regulations has created a volatile insurance market where uncertainty and unaffordability abound. Insurance agents have been hit hard by the perpetual chaos from Washington D.C.

“Since the law went into effect, I’ve lost 8 [insurance] companies – all very competitive,” stated Ronald, an insurance agent and financial planner. “South Carolina only has 4 [insurance] companies available now. There is no competition.”

Ronald noted that when the government forced insurers to go from a 65% reserve to an 85% reserve overnight, several of them bowed out of the market, citing ‘we can’t afford this.’ And, they aren’t the only ones. The lack of competition combined with new mandates has caused premiums to soar. Receiving the brunt of their frustration, Ronald has tried to navigate his clients as best as possible through this difficult situation.

“I’ve had many clients call me, who are already grandfathered, saying their premiums just went up out of the blue by 10% — some 30%. I said, ‘Well, if you went onto the Obamacare plan right now, it is going to be more than your increase.’ I’m telling them don’t shoot the messenger – all I’m doing is trying to get you through this,” he said.

Ronald understands their anger. “They are between a rock and a hard place having to spend more money to keep [their 2013 current] insurance for a year.” But, it’s better than the alternative, which many are bracing for in 2015.

In a non-sugarcoated response, Aetna CEO Mark Bertolini told CNBC that “Obamacare has failed to attract the uninsured,” hypothesizing that another round of steep premiums could cause his company to pull out.

“Are they going to be double-digit [increases] or are we going to get beat up because they’re double-digit or are we just going to have to pull out of the program?” Bertolini asked in a “Squawk Box” interview from the World Economic Forum in Davos, Switzerland. “Those questions can’t be answered until we see the population we have today. And we really don’t have a good view on that….

For Obamacare to work better, it needs more flexibility and choice of insurance programs, Bertolini said.”

With an unhealthy risk-pool mix, slow sign ups and lack of competition, Ronald wonders how solvent insurance companies can remain under these current conditions.

“Insurance companies are going to have to charge whatever it takes to stay viable, and again, it varies state to state and depends on the claims. In South Carolina, we have some health issues. In California, they have more people, so it’s all relative. Also, there is no sharing of the responsibility when you have two companies that are owned by the same mother company,” explained Ronald.

Not having much optimism, he commented, “They are going to run out of money. It is just like the government. There’s already been some talk that they might have to ask for a bailout.”

The new healthcare law has even hurt Ronald’s ability to serve his clients.

“As a field agent, we were able to present and customize plans. I would know people’s budgets and give them the best plan that could fit their budget. We could make changes, if their premium went up. There was a lot of thing we could do, but now our hands are tied.”

If Washington wants to claim credit for the solutions it offers, it should also take responsibility for those it causes. A full repeal of Obamacare would be a start.