From Tyler Durden at zerohedge.com:
After years of delays and failed launches, Obamacare has finally taken hold, and with it the economic and financial implications from this mandatory tax are finally being felt.
We have extensively covered how Obama’s Affordable Care Act will end up being a failure, observing both the economic implications in “In Latest Obamacare Fiasco, Most Low-Income Workers Can’t Afford “Affordable Care Act” as well as its operational shortcomings in “Obamacare Is A Disaster: Co-Op Insurers Across America Are Collapsing, And Now There Is Fraud”, paradoxically even as Obamacare – a tax – was according to the BEA the single biggest contributor to GDP growth in the third quarter.
Of course, the most obvious reason why Obamacare will have a dire impact the economy is also very simple: soaring healthcare premiums, also covered before…
… which incidentally also explain why all those touted “gas savings” failed to materialize in discretionary spending behavior: all of the “saved” money went to cover rising health insurance costs.
None of this should come as a surprise.
What should, however, is that according to a very unexpected twist healthcare premiums are about to soar so much in the coming months that the shocking increases of the past year will seem like a walk in the park.
The reason for this comes courtesy of a new report from the WSJ which explains something few if any had expected: corporate insurers are scrambling to profit from Obamacare!
Yes, we know: Obamacare was written by the health insurance companies, and it was supposed to benefit them first and foremost as US households struggled to catch up to what most rational observers had said would be surging premiums. And, on the top line, it did just that: “under the ACA, insurers have seen an influx of new membership in individual plans and in Medicaid plans they administer for the government, expanding the industry’s total U.S. revenue to $743 billion in 2014, the year the law’s biggest changes took effect, from $641 billion the year before, according to a new analysis by consulting firm McKinsey & Co.”
So far so good, and just as expected – incidentally, that 16% increase in industry revenue comes right out of your pocket, dear U.S. reader with the blessings of the US Supreme Court of course.
But where it gets fascinating is that while the surge in the top-line was expected, what comes as close to a black swan as possible, is what happens below the revenue line on the insurers’ income statement.
The stunning finding comes from a new analysis by McKinsey which notes that much of that revenue growth has been unprofitable! Health insurers lost a total of $2.5 billion, or on average $163 per consumer enrolled, in the individual market in 2014, McKinsey found. A number are also expecting to lose money on their marketplace business for 2015.
To continue reading: Your Health Insurance Premiums Are About To Go Through The Roof