Insurance is a complicated product. Even President Obama figured that out. Hundreds of highly trained actuaries spend thousands of hours assembling risk pools to determine premium levels, underwriting standards, and product offerings. Investment managers spend thousands more trying to match financial assets acquired from those premium payments with long term liabilities to guarantee coverage promises can be kept. Get it right and you are rewarded with a stable company with stock suitable for widows and orphans. Get it wrong and your business dies.
When it comes to health insurance, however, this finely tuned balance has now been completely destroyed, culminating years of political meddling. And for its final Christmas present of a year that will go down as the worst in insurance history, the Obama Administration unilaterally waived yet another key provision of the Affordable Care Act.
Four days before the deadline to sign up, the Department of Health and Human Services told people with cancelled plans facing Obamacare Exchange sticker shock they can now buy cheaper “catastrophic” plans after all—at least until the 2014 midterm elections. This, along with a dozen other changes voted on by exactly zero legislators, may well be the last nail in the coffin of commercial health insurance. The insurers themselves may not admit it, but they are the walking dead.
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