EDITORIAL: Down the drain with Obamacare

OPINION:

Not for nothing is economics called “the dismal science,” but more dispiriting still is President Obama’s attempt to rewrite the principles of the science. The first principle is that the individual engages in economic activity to fulfill his needs, not those of someone else. Obamacare broke that rule by forcing Americans to subsidize the health costs of others, and it’s Obamacare that’s now going broke. Justice triumphs sometimes, after all. If supplicants come to Congress looking for a bailout, the only reasonable answer is no.

Aetna, one of the nation’s largest health insurers, announced that it will pull out of the Obamacare exchanges in 11 of the 15 states where it operates. Aetna, with more than 800,000 enrollees, will only participate in government-run marketplaces in Virginia, Delaware, Iowa and Nebraska, effective next year. The company will continue to sell to customers willing to buy policies not in compliance to Obamacare. Thus Mr. Obama gets another part of his legacy.

The Hartford, Conn.-based company joined President Obama’s signature law confident that government-mandated health care would guarantee a steady flow of profitable customers. But after losing $200 million in the second quarter of this year and $430 million since January 2014, officials concluded they cannot afford to offer the services Obamacare demands for the fees they’re allowed to charge. Aetna is not the first company to reach that conclusion, nor will it be the last. United Healthcare has signaled its intent to back out of most state exchanges in 2017 after losing $1 billion over the past two years. Humana and Blue Cross Blue Shield are scaling back, too, leaving Anthem as the only national firm fully participating.

Profits are tied to sales volume, and Obamacare’s current 11.1 million enrollees is only about half of what the Congressional Budget Office had said would show up. The enterprise was banking on signing up millions of young and healthy participants, whose premiums would subsidize the health care expenses of older enrollees in failing health. To the surprise only of credulous economists, younger Americans decided that buying expensive insurance they would rarely need is a scam and a rip-off. Instead, they’re paying the tax penalty for noncompliance, which this year reaches $695.

For workers participating in Obamacare, the premiums increase by leaps and bounds each year. The average increase sought for the mid-priced “silver plan” in 2017 is 9 percent, raising the monthly bill for a 40-year-old nonsmoker to $281, according to the Kaiser Family Foundation. Already forced to make ends meet on a skimpy paycheck in the jobless Obama recovery, the young are losing ground.

Here’s another economic principle: Companies do business to make money. But Obamanomics sees them only as tools for redistributing wealth, fish to be skinned. The law provides a federal payment to mitigate losses during the program’s first few years, and now those years have expired. That’s why insurers who watched what happened to their bottom line are getting out of Dodge. On his way out the door, Aetna CEO Mark Bertolini looked back at the efforts to keep the program from going under. “Rather than transferring money among insurers, the law should be changed to subsidize insurers with government funds.”

The baseball great Satchel Paige warned of the danger of looking back: “Something might be gaining on you.” This wisdom obviously applies to companies, too. Neither should companies look to Congress for a bailout. Hillary Clinton proposes a tax credit of up to $5,000 per family to offset health care costs, but that would be just another redistribution of wealth. Donald Trump, a successful businessman, wants to scrap Obamacare and start over. A business makes a profit when it offers a quality product at an affordable price.

A business, such as a big insurance company, that forgets that principle should take Satchel Paige’s advice to heart, because that “something” gaining on it looks a lot like bankruptcy.