ObamaCare’s impact on health costs.
Anthem Inc., the second-largest U.S. health insurer by membership, said premiums for ObamaCare insurance probably will go up next year.
Anthem is eking out a small profit from selling policies to individuals under the Affordable Care Act. Many of its rivals aren’t, though, which means prices have to go up, the company told investors and analysts on Wednesday.
Other insurers are charging premiums that are “still well below what we think appropriate rates are for a sustainable environment,” Chief Financial Officer Wayne DeVeydt said on a conference call with analysts.
One of the many factors that can cause a health insurance system to fail is “adverse selection,” a phenomenon in which those who know they will make higher-than-average claims are disproportionately likely to enroll and pay premiums. The inevitable results is a rapid increase in premiums, which encourages even more marginal consumers to forgo insurance, leaving average claims, and therefore premiums, to increase even further.
One approach to limit this problem is to limit the time frame during which enrollment is permitted. Why have limited open enrollment periods? The idea is that without them – that is, if anyone could enroll in health plans whenever they want – people could “game the system,” enrolling when they need health care, and disenrolling when they don’t.
However, 83 percent of ObamaCare enrollees pay far less than $408 because they get tax credits under the healthcare law. The average tax credit for 2016 is $294, meaning that the average share of the premiums that enrollees have to pay is $113. That is up $8 from the $105 people paid on average last year.
Even with subsidies to make coverage more affordable, many people who buy health insurance on the marketplaces spend more than 10% of their income on premiums, deductibles and other out-of-pocket payments, a recent study found. Among those hit hardest, the researchers said, are people who spend nearly a quarter of their income on health care expenses.
“There’s been a lot of talk about how high deductibles and out-of-pocket costs are in the Affordable Care Act, and a lot of anecdotes about that, and this [study] quantifies that in a more systematic way,” said John Holahan, a fellow at the Urban Institute’s Health Policy Center who co-authored the study.
In a survey of non-seniors, a New York Times/Kaiser poll found about one-in-five people struggle with medical bills even though they have insurance. Among insured people who reported crushing medical debts, about three-quarters reported putting off vacations, major purchases and cutting back on household spending.
Nearly two-thirds used up all or most of their savings. Far fewer had to resort to second jobs, take on more hours or ask family members for funds (42% to 37%).
iMost of the people who tell you that consumerism can’t work in health care tend to work in health care themselves. But if they were doing such a great job, maybe our health care system wouldn’t be riddled with high costs, fatal medical errors, and hundreds of billions of dollars in waste and fraud.
Companies in other industries – from Wal-Mart to Trip Advisor, Amazon, and Google – have figured out ways to simplify incredibly complex systems to lower the amount of time and the cost for consumers to identify affordable, quality products. Those companies have just one thing in common: they answer to consumers.
Rather than focusing on how health care worked in the past, policymakers should encourage competition by clearing away outdated regulations that prevent savvy, tech-based entrepreneurs from empowering patients with the information they need to find the providers who deliver the best outcomes – often at a more affordable cost.
Eager to maximize coverage under the Affordable Care Act, the Obama administration has allowed large numbers of people to sign up for insurance after the deadlines in the last two years, destabilizing insurance markets and driving up premiums, health insurance companies say.
The administration has created more than 30 “special enrollment” categories and sent emails to millions of Americans last year urging them to see if they might be able to sign up after the annual open enrollment deadline. But, insurers and state officials said, the federal government did little to verify whether late arrivals were eligible.
In most states, health insurance premiums on the individual marketplace are rising by double digits under Obamacare. 17 states will face average premium increases of 20% or more. Iowans, for instance, will see their premiums spike by 22% this year. In Minnesota, Alaska, Tennessee, and Hawaii, rates will rise by 30% or more.
Want to know where your state ranks? FreedomWorks has calculated the average rate hike and the range of premium changes individuals purchasing insurance on the individual market will face. Click below to read more.
Recently, the Obama administration said 11.3 million Americans had signed up for 2016 health exchange plans by late December.
“That’s still significantly lower than what experts had initially expected at this point in time in exchange implementation,” said Caroline Pearson, senior vice president with health care consulting firm Avalere. “We had anticipated, based on the Congressional Budget Office estimates, that perhaps 21 million people might be enrolled in 2016.”
“Many middle income people continue to suggest that exchange plans just aren’t affordable for them,” Pearson told CNBC. “Even with the subsidies, they simply can’t make the monthly premiums work in addition to all of the out of pocket costs.”
Between 1999 and 2015, premiums increased by 203%, outpacing both inflation and workers’ earnings. Between 2014 and 2015, the average premium for single and family coverage increased 4%, and over the past 5 years, deductibles increased faster than both premiums and wages.