By Sally C. Pipes • Investor’s Business Daily
ObamaCare enrollees should brace themselves for another year of double-digit premium hikes.
Average premiums for plans sold through the state and federal insurance exchanges will jump as much as 32% next year, according to a recent report from actuarial firm Milliman. Consumers in some markets could face 80% rate hikes, according to a separate analysis from Blue Cross Blue Shield.
Democrats have pounced on these projections to blame the GOP for “marketplace sabotage.” Senate Minority Leader Chuck Schumer, D-N.Y., remarked that “Republicans and the Trump administration own any and all increases in health care premiums for American consumers.”
Sorry Chuck, but GOP malfeasance isn’t the problem. ObamaCare’s burdensome mandates are driving the premium hikes. The only ones who “own” these rising rates are the politicians who continue to prop up this disastrous law.
Next year, premium increases will vary wildly between states. Some Virginians could see their premiums skyrocket by 64%. Golden State residents using the Covered California exchange are expected to face an 11% hike.
It’s true that Republicans have made significant changes to ObamaCare in recent months.
In October, President Trump halted a massive insurer bailout known as “cost-sharing reduction subsidies.” ObamaCare requires insurers to provide assistance on copays and deductibles to consumers with certain exchange plans who earn less than 250% of the poverty level. Insurers lose money with this deal, obviously — but the CSR payments effectively reimbursed them for those losses.
Democrats warned that insurers would raise premiums to offset the lost subsidy revenue, which totaled $7 billion in 2017.
In December, Congress repealed ObamaCare’s individual mandate penalty — which fined Americans for not purchasing insurance — as part of their massive tax reform. Democrats say that, without a penalty, healthy people would drop out of the exchanges. The remaining enrollees would be sicker, on average. So insurers would need to hike premiums to compensate for the higher costs.
And in February, the Trump administration proposed a rule to undo President Obama’s limitations on short-term health plans, which are much cheaper than exchange plans because they’re not subject to the same costly regulations. Prior to 2016, Americans could purchase short-term coverage for just shy of a year.
In his last year in office, President Obama cut the period to just 90 days. He deliberately made short-term plans less attractive to force people into the exchanges. President Trump is merely rolling back the clock to the status quo during most of the Obama administration.
The Trump administration has also proposed another rule that would enable small businesses and sole proprietors to band together to purchase cheap, less-regulated coverage through association health plans, or AHPs. These two rules, if implemented, would enable 6 million additional people to purchase coverage, according to the Congressional Budget Office.
ObamaCare Limits Freedom
Democrats claim the short-term and AHP rules would enable healthy people to flee the exchanges.
Because of these reforms, the left-leaning Center for American Progress predicts that benchmark premiums for the average 40-year-old will rise by more than $1,000 nationwide in 2019. In states like Nebraska and Wyoming, annual benchmark premiums will increase by more than $2,000, according to CAP.
President Trump and Congress aren’t to blame for these increases. ObamaCare premiums were rising well before Republicans took over Washington. Average individual market premiums increased 99% from 2013, the year before the exchanges opened, to 2017, when President Obama left office. And last fall, before these changes were implemented, insurers hiked 2018 individual plan premiums by an average of 34%.
They’ve repeatedly raised premiums because ObamaCare’s burdensome regulations cause insurers to lose money year after year.
For example, the law’s community rating mandate prevents insurers from charging older enrollees more than three times what they charge younger ones — even though the average 64-year old is nearly five times more expensive to insure than the average 21-year old.
ObamaCare’s guaranteed issue mandate prohibits insurers from denying coverage based on health status. That’s even true if customers have costly chronic conditions that will cause insurers to hemorrhage money.
Mandates Everywhere
And the essential health benefits mandate requires all plans to cover 10 broad categories of medical care — including pediatric dental services, maternity care, and substance abuse treatment. All enrollees must pay for these benefits, even if they don’t want them.
Without any real ability to control costs, insurers are forced to raise premiums across the board. The Department of Health and Human Services commissioned a study in 2017 to analyze the effect that ObamaCare’s regulations had on insurance premiums. It found that these mandates were the “chief driver of premium increases.”
Specifically, the study analyzed premium hikes in Georgia, Pennsylvania, Ohio, and Tennessee from 2013 to 2017. Researchers found that ObamaCare’s mandates — including the community rating and guaranteed issue rules — were responsible for up to 76% of the increases during that period.
If anything, President Trump and Republican lawmakers have made insurance more affordable. Thanks to their efforts, the Congressional Budget Office predicts that 6 million more people will be insured in just five years.
It’s intellectually dishonest to blame Republicans for premium hikes. ObamaCare’s architects and proponents are the ones who sabotaged America’s insurance markets. By scrapping the individual mandate and expanding access to short-term and AHP plans, Republicans are simply giving Americans affordable alternatives to budget-busting exchange coverage.