ObamaCare’s impact on health costs.
As congressional Republicans’ efforts to repeal and replace the Affordable Care Act remain in limbo, the Trump administration and some states are taking steps to help insurers cover the cost of their sickest patients, a move that industry analysts say is critical to keeping premiums affordable for plans sold on the law’s online marketplaces in 2018.
This fix is a well-known insurance industry practice called reinsurance. Claims above a certain amount would be paid by the government, reducing insurers’ financial exposure and allowing them to set lower premiums.
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Section 202 of the AHCA contains a transitional schedule of tax credits that would apply only in 2018 and 2019. These tax credits vary by both age and income, and they are set up so that they cap Americans’ exposure to high premiums. Take a childless 40-year-old making $25,000. Under Section 202, he would be expected to pay 6.3% of his income—roughly $1,500—for out-of-pocket premiums. The tax credit covers the rest. So if he buys a policy that costs $5,000 a year, the tax credit would be $3,500. If congressional leaders continue Section 202’s tax credits past 2019, they can kill three birds with one stone: repealing more of ObamaCare, lowering premiums for everyone, and making coverage especially affordable for the working poor.
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Across the board, for all ages and family sizes, for HMO, PPO, and POS plans, premium increases averaged about 60 percent from 2013, the last year before ACA reforms took effect, to 2017. In same length of time preceding that, all groups experienced premium increases of less than 10 percent, and most age groups actually experienced premium decreases, on average.
These findings come from new data from eHealth, which not only sells ACA Marketplace health plans, but sold a wide variety of health plans through its own website for many years before the ACA was passed, as well as both on and off the Exchanges after the ACA took effect.
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Spending on prescription drugs for health plans created under the Affordable Care Act increased last year at a rate more than three times that of other commercial plans and most government-run plans managed by Express Scripts Holding Co.
Express Scripts, the largest manager of prescription drug plans for U.S. employers, on Tuesday said year-over-year spending per person for individual insurance plans sold on the Obamacare exchanges where it manages the pharmacy benefit rose 14% in 2016, driven by higher drug prices and utilization.
Express Scripts said per-capita spending for other commercial plans it manages, mostly for employers, rose just 3.8% last year, despite an 11% increase in list prices for brand-name drugs.
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Just 8.8% of Americans lacked health insurance as of this past September, according to the latest numbers from the National Health Interview Survey conducted by the Centers for Disease Control and Prevention.
But more insured people are on the hook for sizable portions of their health care costs. More than 39% of Americans younger than 65 are enrolled in a plan with a high deductible — a big increase from 2010, when 25% of people were in a high-deductible policy. Popular Republican plans to replace Obamacare rely heavily on high deductibles and health savings accounts.
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A new poll by McLaughlin & Associates, commissioned by Hudson Institute finds that when the link is made between Obamacare’s preexisting-conditions protections and higher premiums, Americans prefer lower premiums to such protections. The poll included 36% Democrats and 33% Republicans.
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Uninsured rates in low-income families have fallen under the Affordable Care Act, yet more than a third of Americans continued to face difficulties paying their medical bills in 2016, a survey found.
Adults in poor families were among the greatest beneficiaries of the ACA, with uninsured rates falling as much as 17 percentage points since it became law in 2010, according to a study from the Commonwealth Fund.
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Lawmakers will soon grapple with the fact that sick people are expensive to cover, and someone has to pay. However, we must understand that there is no certain cost to health insurance.
What the general discussion about how to cover people in the future is missing is that Obamacare is so flawed that by itself it is manufacturing plan premium levels that are at least 30% to 40% higher than they need to be.
The Obamacare insurance exchanges cover only about 40% of those that are subsidy eligible, when the longstanding insurance industry underwriting rule calls for 75% of an eligible group to be covered in order to have enough healthy people enrolled to pay the costs of the sick. This critical point that is being missed.
What would happen if the plans were more attractive––if people saw value in them? And, if we had 75% of the eligible group signing up as a result, what impact would that have on current premiums?
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Congress has begun the work of replacing the Affordable Care Act, and that means lawmakers will soon face the thorny dilemma that confronts every effort to overhaul health insurance: Sick people are expensive to cover, and someone has to pay.
The 2010 health law, also known as Obamacare, forced insurers to sell coverage to anyone, at the same price, regardless of their risk of incurring big claims.
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Next year, taxpayers will fork over nearly $10 billion more to cover double-digit premium hikes for subsidized health insurance under the ACA, according to a study from the Center for Health and Economy. The study estimates that the cost of premium subsidies under the ACA will rise from $32.8 billion currently to $42.6 billion. Under current law, “you get a premium increase, you pour more money in,” said economist Douglas Holtz-Eakin, founder of the Center for Health and Economy. “The concern is that will feed more premium increases.” If the health care law is repealed next year, it is still yet to be seen what the remaining carriers participating in the ACA exchanges will do in 2018. It is also unclear how supportive Congress will be for subsidies going into a system slated to disappear.
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