One of the nation’s largest insurance providers on the east coast, CareFirst Blue Cross Blue Shield is warning patients that it is preparing to raise premiums on Obamacare by 50% in the coming year, reports the Washington Post.
The company estimates that it will lose around $600 million since it started offering healthcare plans on the state’s online exchanges.
To offset the death spiral, CareFirst is proposing a staggering 50% increase in plans offered in Maryland, as well as a 35% increase in Virginia and 29% increase in the nation’s capital.
“What we’re seeing is greater sickness levels. The pool of beneficiaries is becoming sicker, in part because healthier people are not coming in at the same level we hoped,” said a chief executive at CareFirst.
The company’s Obamacare plan covers nearly a quarter million patients.
Maryland is not the first state to witness the collapse of President Obama’s signature healthcare law. Similar patterns have been seen in Tennessee, Iowa, Virginia, and Kentucky.
The ‘death spiral’ occurs when sick people who need expensive coverage stay in the insurance pool as healthier individuals opt-out of the marketplace. The result is rapidly increasing insurance costs which translates to higher premiums and massive deductibles.
As a result, many insurance companies are cutting their losses and dropping out of the Obamacare exchanges.