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Humana Inc (HUM), Stryker Corporation (SYK) & More: Five Ways Obamacare Will Fail

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Whether you’re ready for it or not, the Patient Protection and Affordable Care Act, known collectively as Obamacare, is going to be fully implemented in less than nine months. The blatant rising costs of health care in this country, compounded by the successful implementation of socialized health care from our neighbors to the north, pre-empted President Obama and lawmakers to vote for change in 2010. Yesterday, in fact, I examined five ways that this bill will improve the scope of health care in this country.

However, not everyone is on board with the proposed changes set forth in this bill. In fact, the opposition has tried everything under the sun in order to get Obamacare repealed without any success.


Source: White House on Flickr.

Today, I propose to turn the tables and examine five areas where Obamacare appears destined to fail.

1. Health insurers will keep most of their leverage.
If you recall, one of the key points I touched on yesterday where Obamacare is a boon for paying members is that it requires the insurance industry to spend at least 80% of its premium revenue on actual health services. This will cap the profit potential of insurers and is expected to cancel out unwarranted premium hikes under the PPACA.

Conversely, there’s little in the way of fines and regulations that will ultimately stop health insurers from raising their premiums or from shocking current members with huge premium hikes in advance of the full implementation of the PPACA in 2014. Obamacare was expected to take the power of premium pricing away from health insurers and put it into the hands of consumers in a competitive marketplace, but it appears it will be more of the same even after the bill is put into action.

A perfect case in point is the complete 180 that the Centers for Medicare and Medicaid Services, or CMS, pulled on Medicare Advantage providers last week. In February, insurers like Humana Inc (NYSE:HUM) and Universal American Corporation (NYSE:UAM) that provide Medicare Advantage — a broader-care coverage plan for seniors that involves fewer out-of-pocket costs — were informed that their Medicare reimbursement rates would drop 2.3%. Following weeks of rigorous lobbying to lawmakers, the CMS reversed its decision from a 2.3% reduction in reimbursements to a 3.3% increase, claiming that it changed the scope by which it expected doctor pay to fall as its reasoning. In essence, by complaining and lobbying, the insurance industry orchestrated itself a nice raise and completely debunked the premise of Obamacare, which is to reduce the reliance of private insurers on the governments’ wallet.

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