Health & Human Services Secretary Alex Azar recently announced that premiums for a benchmark Affordable Care Act 2019 plan on the federal exchange will drop 2 percent nationally compared with 2018 premiums — the first reduction since the law’s implementation.
While this is encouraging news, it is no cause for a major celebration. When Obamacare’s exchanges open for business in just a few weeks, on Nov. 1, many consumers will still find exchange plans unaffordable. Rates will soar by double digits in many states. Despite the slight decline in the national average premium, the typical 2019 plan sold through the HealthCare.gov exchange will still likely cost more than twice as much as the average individual market plan in 2013, the year before most Obamacare provisions went into effect.
Until Obamacare’s incoherent rules and regulations are loosened, there will be no sustained relief for everyday Americans.
Hefty premium increases are the new normal. Americans who shopped for Obamacare-compliant coverage off the exchanges fared just as poorly as those who watched rates soar on the exchanges. The average individual market plan sold through eHealth, an online insurance marketplace, cost $197 per month in 2013. In 2018, the average plan on eHealth was $440 per month — a 123 percent increase.
Republicans are lessening premium pain
Consumers won’t get much relief this enrollment cycle. But at least they won’t be penalized for going without coverage, as Republicans reduced the fine for violating the individual mandate to zero.
Premiums for the benchmark 2019 silver plan in Burlington, Vermont, will rise 23 percent relative to 2018. In the nation’s capital, they’re going up 21 percent. In Seattle, premiums are jumping 12 percent.
These hikes are the inevitable result of Obamacare’s premium-inflating mandates.
The law requires all plans to cover 10 essential health benefits, from prescription drugs to pediatric dental care. Insurers have raised prices in response. As much as 11 percent of Pennsylvania’s premium increases and 8 percent of Georgia’s were due to the essential health benefits mandate, according to a McKinsey study.
Obamacare also forbids insurers from denying coverage to customers based on their health status or charging sicker enrollees more than healthy ones. And it bars insurers from charging older enrollees more than three times what they charge younger enrollees, even though older people are five times costlier to insure.
These patient protections are popular, but they restrict insurers’ ability to manage risk. To cover the cost of sick enrollees, insurers have to effectively overcharge healthy ones.
Young, healthy people have responded to these high costs by declining to purchase coverage. The result has been a death spiral. As premiums rise to cover the cost of older, sicker enrollees, more and more healthy people drop their coverage. The average cost of each remaining enrollee rises in response, so insurers hike rates again. That prompts even more dropouts.
From 2015 to 2018, the number of individual-market enrollees declined by 3 million to 14.4 million, according to the Kaiser Family Foundation.
Increasingly, only people who receive subsidies from the federal government can afford the plans for sale on the exchanges. More than 8 in 10 people who bought 2018 exchange plans received subsidies.
Democrats blame Trump? Blame Obama.
Despite the fact that premiums rose throughout President Barack Obama’s second term, Democrats claim that the most recent rate increases are President Donald Trump’s fault. In August, four liberal cities — Baltimore, Chicago, Columbus and Cincinnati — filed a lawsuit alleging that Trump is “waging a relentless campaign to sabotage and, ultimately, to nullify the law.”
That’s nonsense. Obamacare is imploding under the weight of its own regulations. The Trump administration is simply trying to make insurance more affordable.
It’s expanding access to association health plans (AHP), which enable small businesses and some self-employed individuals to band together to buy health insurance. Because these plans don’t have to comply with Obamacare’s essential health benefits mandates, insurers can offer them at lower rates.
AHPs are projected to cut premiums for small businesses by $2,900 and premiums for the self-employed by $9,700, according to consulting firm Avalere.
The administration has also relaxed restrictions on short-term health plans, which are exempt from Obamacare’s many cost-inflating mandates. Insurers will be able to offer short-term coverage that lasts up to a year — and renewals of that coverage for up to three years.
Californians, however, will not be able to take advantage, as the state recently banned health plans that last fewer than 12 months.
Until this year, Obamacare’s flawed design had caused six straight years of premium increases. The Trump administration’s workarounds will help some people obtain more affordable coverage. Ultimately, Congress must repeal Obamacare’s mandates if it wants to bring lasting relief to millions of Americans.