ObamaCare’s impact on health costs.
A plan the Clinton campaign unveiled in September would create a refundable tax credit worth as much as $2,500 per individual and $5,000 per family to cover out-of-pocket health-care expenses. Knowing there is a federal credit might give employees incentive to incur additional expenses to exceed the subsidy threshold. That would mean a credit aimed at mitigating the effects of rising health costs for some families could end up exacerbating the problem on a broader scale.
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Obamacare has caused health insurance premiums to skyrocket. It has caused millions of Americans who liked their health plans to lose their health plans. It has caused doctor and hospital networks to narrow. Now the Wall Street Journal reports that the Obamacare exchanges in Alabama and Alaska will each have one—that’s right, one—insurer offering plans. We’re moving toward “single insurer” health care.
In short, Obamacare is wrecking the private health insurance market.
The Congressional Budget Office says that the Obamacare subsidies for private insurance will cost $43 billion this year alone. That’s an average of $5,375 per person for those who have been added to the private insurance rolls—or $21,500 per family of four. Meanwhile, the typical 36-year-old (or younger) who makes $36,000 a year (or more) gets $0 under Obamacare.
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Rising rates are not solely the result of the uninsured who bought health plans on the exchanges having a tremendous pent-up demand for healthcare services. Many insurers also underpriced their plans to gain a larger share of the new market. The Congressional Budget Office found premiums in 2014 were 15% lower than expected.
The most significant factor behind next year’s sharply rising prices, experts say, is that millions of “young invincibles,” who represent a large segment of the uninsured pool, have so far not signed up for Obamacare.
“We saw very little of the young and healthy,” said Sherri Huff, a consultant and former chief financial officer of Common Ground Healthcare Cooperative in Wisconsin, one of the insurance co-ops funded by ACA loans.
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Tens of thousands of Iowans who buy their own health insurance are about to receive a shock in the mail.
Wellmark Blue Cross & Blue Shield is sending letters this week telling about 30,000 customers it plans to raise their premiums by 38 percent to 43 percent next year.
Wellmark sells about three-quarters of individual policies in Iowa’s health-insurance market. The steep increases will affect people who bought relatively new plans that comply with rules of the Affordable Care Act.
Another 90,000 Wellmark customers who hold older individual insurance plans are expected to face smaller increases, which will be announced in June. The increases being proposed this week also don’t affect the hundreds of thousands of Wellmark customers who obtain coverage via their employers. Their premiums are expected to rise less, because they are in larger, more stable pools of customers.
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California’s health insurance exchange estimates that its Obamacare premiums may rise 8 percent on average next year, which would end two consecutive years of more modest 4 percent increases.
The projected rate increase in California, included in the exchange’s proposed annual budget, comes amid growing nationwide concern about insurers seeking double-digit premium hikes in the health law’s insurance marketplaces.
Any increases in California, a closely watched state in the health law rollout, are sure to draw intense scrutiny during a presidential election. Republicans are quick to seize on rate hikes as further proof that President Barack Obama’s signature law isn’t doing enough to hold down health care costs for the average consumer.
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As the fourth year of Obamacare approaches, Politico’s Paul Demko reports that consumers can expect more of the same price hikes and narrowed choices as they have seen the first three years. The Obama administration insists that prices only rose eight percent for 2016 over the previous year – even though that itself is still more than three times the rate of inflation, and ignores states like Minnesota where the average premium increase was over 30 percent.
“There are reasons to think the next round may be different,” Demko warns. He quotes a Deloitte executive who agrees. “A number of carriers need double-digit increases” for 2017. Those price increases will hit the Obamacare exchanges on November 1st, one week before voters elect a new President and Congress.
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Nearly 25% of Americans surveyed last September who had coverage through employer plans, the Affordable Care Act exchanges, or individual plans outside the exchanges reported problems paying family medical bills in the previous 12 months, according to the Urban Institute’s Health Reform Monitoring Survey, released last month. That compared with 16% of people on Medicaid and 27.8% of uninsured individuals who said they had problems with medical bills.
The Kaiser Family Foundation reached similar findings through focus group interviews with 91 low-income Medicaid and exchange-plan enrollees in six cities during January and February 2016.
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Insurers are in the process of filing proposed premiums for ACA-compliant nongroup plans that will be available inside and outside of Marketplaces in 2017.
Recent reports by insurers about their experiences during the first two years under the ACA suggest that some assumed that enrollees would be healthier than they turned out to be and set their premiums too low, leading in some cases to significant financial losses for ACA-compliant plans and an expectation that premiums could rise faster in 2017. Some insurers took relatively large premium increases for 2016 to better match premium levels with the costs of their enrollees — which would help to offset the need for 2017 premium increases — but it is too soon to know if these efforts were generally successful or whether losses have continued into 2016.
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It already looks clear that many Obamacare insurance plans are going to raise their prices significantly.
Over the last few years, average premium increases in the ObamaCare markets have been lower than the increases for people who bought their own insurance in premiums before the Affordable Care Act. But several trends are coming together that suggest that pattern will break when plan premiums are announced in early November. Many plans may increase prices by 10 percent, or more.
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Insurers have begun to propose big premium increases for coverage next year under the 2010 health law, as some struggle to make money in a market where their costs have soared.
The companies also have detailed the challenges in their Affordable Care Act business in a round of earnings releases, the most recent of which came on Wednesday when Humana Inc. said it made a slim profit on individual plans in the first quarter, not including some administrative costs, but still expects a loss for the full year. The Louisville, Ky.-based insurer created a special reserve fund at the end of last year to account for some expected losses on its individual plans in 2016.
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