Rising Healthcare Premiums – Who is to Blame?

 

It won’t be long now. Insurance companies will soon be sending out notices of their rising healthcare premiums. Then the blame game will start all over again.

Democratic Minority Leader Chuck Schumer already declared recently that he will be “relentless in making sure the American people exactly understand who is to blame for the rates.” Is he living in an alternative universe?

ObamaCare was passed without a single Republican vote in 2010 and Republican efforts to repeal it in 2017 didn’t receive a single Democratic vote to fix the problems. Only in Washington can someone stand up in front of a camera and make such bold misrepresentations of reality with a straight face.

To be sure, if all Republicans had agreed on the proposed repeal and replacement plans, we wouldn’t be facing these escalating premiums this fall. Are you paying attention, John McCain, Susan Collins and Lisa Murkowski?

How bad is the problem going to be this year?

Requested premium increases are on average 19% in Washington and 24% in New York. The Congressional Budget Office said in May that “benchmark” or midlevel plans (Silver) on the exchanges would absorb a 15% increase.

The Wall Street Journal editorial board says Democrats claim the increases are recent and only possible because of Republican “sabotage” of ObamaCare since Trump took office. But WSJ points out that ObamaCare has been on this road for a long time. Average premiums doubled between 2013 and 2017 (before the Trump administration) according to Health and Human Services data. How quickly we forget!

The list of causes for these rising premiums is long but the short list would include:

  • Community rating instead of actuarial analysis – This forces young and healthy patients to pay much higher rates than they deserve while giving older and sicker individuals lower rates than the cost of their healthcare. The result is few young and healthy individuals enroll, thus driving up the premiums for everyone else.
  • Individual Mandate enforcement and repeal – The architects of ObamaCare insisted on a mandate to force individuals to purchase premiums they didn’t want – like the young and healthy mentioned above. But even the Obama administration failed to enforce this provision of the law because it was politically unpopular. The Trump administration repealed this provision in the Tax Reform legislation of 2017. The result is fewer enrollees.
  • Dumping by Insurers and Patients – Insurance companies dump the costly patients on the Exchanges and on each other. Patients dump their pre-existing conditions on other patients by gaming the system. For more on this subject read my recent post The Dumping Problem in ObamaCare. These dumping actions drive up the costs for everyone.

 

WSJ says Democrats are also falsely claiming the Trump Administration’s plans to expand access to “short-term” insurance association health plans are responsible for higher rates. The progressive Center for American Progress is churning out estimates about how mandate-repeal and short-term rules will drive up premiums by exactly $1,011 in Florida, for instance.

WSJ says, “This is certainly amazing considering that regulations aren’t even finalized and the Trump Administration hasn’t resolved important questions about incentives, like whether the short-term plans will have the option to be “guaranteed renewable” (yes, please). The short-term and association markets have been traditionally small, but properly structured they have the potential to expand coverage considerable.” 

“Republicans will have to press the case that individual choice is better than the shared misery of the ObamaCare exchanges. The GOP has essentially decided to let as many people as possible flee the exchanges and subsidize those who remain. The Democrats want everyone to pay more to prop up their failing law.” (emphasis mine)

The Wall Street Journal editorial board has correctly described the problem in this last sentence – ObamaCare is the Democrat’s failing law. Any blame for the rising insurance premiums should be borne by Democrats who created this law and continue to defend it – and Republicans who failed to repeal it when they had the chance.

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