ObamaCare’s impact on health costs.

For several years, the Obama administration has urged state insurance regulators to use tools provided by the Affordable Care Act to hold down health care premiums.

Now federal officials will have a chance to practice what they preach as they confront big increases proposed in several states where they are responsible for reviewing rates.

Federal officials defer to the insurance commissioners in 46 states deemed to have “effective rate review” programs. But in Missouri, Oklahoma, Texas and Wyoming, the federal government is in charge of reviewing rates.

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Consumers who purchase their insurance through the public exchanges will likely see prices rise again next year, according to a new analysis of proposed premiums for next year.

The Avalere Health analysis of 14 states where data is available finds that premium increases for average silver plans would go up by 11 percent. Lower-cost silver plans would increase a bit less, by 8 percent.

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The word is right there in the name of the law: “Affordable.” The ACA promised to bring health insurance down to earth, letting uninsured people buy policies that didn’t break the bank, and bringing the astonishing cost of medical care into reach for all Americans.

What’s becoming clear, three years in, is that “affordable” depends where you look. Twenty million more people are covered and tens of millions of others have broader benefits because of Obamacare. But many insurers, faced with new coverage requirements and competition on premiums, have shifted costs onto consumers.

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The Illinois Insurance Department moved Tuesday to shut down Land of Lincoln because of its unstable financial health, leaving about 49,000 policyholders in a lurch. They will lose coverage in the coming months, but neither regulators nor the company have said exactly when.

Policyholders will be able to buy insurance from a different carrier to cover them for the rest of 2016, according to the state Insurance Department. But switching plans is going to cost them.

The co-pays and deductibles enrollees have been paying since January will not transfer to new plans. A new plan will reset deductibles and out-of-pocket maximums paid by consumers.

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Health insurers in Michigan are seeking another round of double-digit rate increases next year for plans they sell to individuals, although smaller increases for their small group plans.

Insurance giant Blue Cross Blue Shield of Michigan has asked state regulators for permission to boost its premium rates by an average 18.7% for individual plans, along with a 14.8% increase for its Blue Care Network individual plans. Those plans — closely associated with the Affordable Care Act, commonly referred to as Obamacare — cover about 200,000 individuals in the state, down from 310,000 people as recently as a year ago.

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If you’re looking to find a smashing Obamacare success story—a place where the nation’s biggest and most controversial new law in a generation has truly lived up to its promise—you might stick a pin directly in North Carolina.
The central pledge of the Affordable Care Act was to make insurance available to people who didn’t have it, creating a new safety net for millions nationwide. And in North Carolina that’s exactly what happened. People flocked to the program: More than 600,000 people there signed up for Obamacare policies in 2016, and roughly 90 percent of those got financial help to pay their insurance bills, also through Obamacare. Thanks directly to the ACA, the number of people without health insurance in North Carolina has plummeted by 30 percent in the past three years. Far more people are covered, and far more of them can afford their health insurance.

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Out-of-pocket spending is a controversial topic in healthcare. On the one hand, the purpose of insurance is to reduce the financial impact of adverse events, like illness and injury, so higher out-of-pocket costs mean insurance is providing less protection. On the other hand, with little or no exposure to costs, a patient might over-consume healthcare, going to doctors for minor illnesses that could be self-treated, or getting screening tests – or even surgical procedures – that aren’t really necessary. In the latter case, the incentive effects of out-of-pocket payments might reduce wasteful healthcare spending and leave spending that is truly necessary mostly unaffected. The result would be a reduction in overall healthcare spending.

When exposure to out-of-pocket costs rises, which effect actually dominates? A recent study in JAMA Internal Medicine gives a hint of what happens, and it’s not looking good for incentive effects in the world of the Affordable Care Act (ACA).

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This year, premiums were up an average of 8 percent. In many states, double-digit premium hikes were the norm.

 Next year, they’re likely to be even bigger, according to Marilyn Tavenner, the former chief of the Centers for Medicare and Medicaid Services under President Barack Obama and current head of the insurers’ main trade group — America’s Health Insurance Plans.
There are less costly ways to make sure that all Americans have access to coverage — and that they can afford it. They’re called “high-risk pools” and they can protect those with pre-existing conditions without jacking up premiums for everyone else.
Obamacare was supposed to ensure affordable health coverage through two related provisions — “guaranteed issue” and “community rating.” The first forbids insurers from denying anyone a policy, and the second prevents them from charging anyone any more than three times what they charge anyone else.
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The GOP House blueprint for health reform repeals these taxes. Specifically, the report cites:

  • the 3.8 percent bracket in the Medicare payroll and self-employment tax
  • the 3.8 percent “net investment income tax” (NIIT) on savings and investment
  • the additional 10 percentage point surtax for non-qualified health savings account (HSA) withdrawals
  • the “medicine cabinet tax” which denies the use of pre-tax HSA, health reimbursement arrangement (HRA), and flexible spending account (FSA) dollars for the purchase of non-prescription, over-the-counter medicines
  • the $2500 cap on medical FSA deferrals
  • the “Cadillac plan” tax of 40 percent on high cost health insurance plans
  • the “health insurance tax” (HIT)
  • the tax penalties associated with the individual and employer mandates
  • the medical device excise tax
  • the industry tax on pharmaceutical companies
  • the “high medical bills tax” which disallows an itemized deduction for medical expenses for millions of middle class families
  • a tax on employers helping their retired employees purchase Medicare Part D plans

In presidential politics, party professionals on both sides of the aisle live in fear of the dreaded “October surprise” that can compromise their candidates’ chances.

In 2016, the joker in the deck may come the first week of November — and it won’t be a surprise, just a shock: Fueled by the requirements of the Affordable Care Act, Americans’ health insurance premiums are likely to spike.

The policy debates that preoccupy Beltway insiders are often far removed from the concerns of most American voters. The Export-Import Bank, the intricacies of the Dodd-Frank financial regulatory requirements, quantitative easing, and rules promulgated in obscure administrative agencies — this is not the stuff of middle-class anxiety. While such policy and regulatory decisions do affect citizens nationwide, it’s not always immediately obvious how. Not so jobs, wages, schools, and health care — these issues hit home.

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