Nobody’s happy about the average 25 percent increase in Obamacare premiums—but don’t expect it to change.
Health policy experts say it’s too late for Congress or the administration to try to minimize premium hikes for next year. There’s only a brief window even to affect 2018 premiums, and that would require the political will to make meaningful changes to Obamacare in the first few months of a new administration.
“It is what is; 2017 is basically now out the door, and it is hard to fathom anything to change it either legislatively or regulatorily. … Once you start a plan year it’s really hard to tell plans to do something different,” said Rodney Whitlock, vice president of health policy at ML Strategies and a former health aide to Republican Sen. Chuck Grassley.
The Obama administration said Monday that premiums for a middle-of-the-road Obamacare policy—the group of plans used to calculate premium subsidies—would increase by an average of 25 percent next year. Even so, the administration said, 72 percent of current marketplace enrollees can find a plan for $75 or less per month after subsidies, though many consumers would need to return to the exchanges and shop for a new plan in order to maximize their subsidies.
In the wake of the announcement, White House press secretary Josh Earnest re-touted some Obama-backed solutions—such as expanded tax credits to young people—and called on Republicans to come to the table to discuss ideas.
Some experts suggested that the sharp increase was the result of insurers underpricing their policies when they first entered the new marketplaces, and ending up with sicker, more expensive customers than they had expected.
Policy experts say lawmakers do have tools available to boost enrollment or curb future premium increases—but most of those options would involve expanding some of the law’s most unpopular or most expensive provisions.
“The core problem is outside of the lower-income population that qualifies for extra help, there’s a significant issue of healthier people not signing up, and that I think is going to require some legislative changes in the way the benefits and the subsidies and the payment to plans are designed. And there has been debate around whether that’s feasible or not,” said Mark McClellan, director of Duke University’s Margolis Center for Health Policy and a former administrator of the Centers for Medicare and Medicaid Services and commissioner of the Food and Drug Administration.
In the same vein, Whitlock suggested looking at the individual mandate, the penalty for not having health insurance, saying it is not driving enough younger people to buy plans.
Earnest said President Obama’s idea to offer expanded tax credits for young people to encourage them to sign on through the marketplaces “would improve the composition of the risk pool in a way that would reduce costs for everybody, or at least limit the growth in costs for everybody.”
But McClellan and Whitlock both cast doubt on seeing any fixes in the next few months.
Elizabeth Carpenter, a senior vice president at Avalere Health, also questioned whether the next Congress would want to reopen Obamacare and how much political capital the new president would be interested in spending on trying to stabilize the market.
Soon after the news broke of the double-digit increase in exchange premiums, House Energy and Commerce Committee Chairman Fred Upton pushed the Republican plan to repeal and replace Obamacare.
Senate Finance Committee Chairman Orrin Hatch also touted his legislation that would appeal the health care law. “That Obamacare has failed to control costs comes as little surprise for those who have long warned of such results, and does little to dispel the notion we are seeing the law implode at the expense of middle class families,” he said in a statement.
However, Carpenter added that if Hillary Clinton is elected, her administration might be looking for every regulatory opportunity to restore confidence in the market.
Clinton over the last year has released a slew of health care and drug-pricing proposals. Among them, she says she will ensure the Department of Health and Human Services has the authority to block or modify unreasonable health insurance premium rate increases. HHS now has the power to review particularly large rate increases, but it cannot block them.
Whitlock noted that these increases in the 2017 premiums were justifiable enough that the federal and state governments let them move forward.
The administration touted the law’s benefits this week, including its requirement that insurers cover people with preexisting conditions. But it acknowledged that provision was tied to next year’s premium hikes.
“Because excluding people with preexisting conditions was previously allowed in the individual market, there was no data available on how much it would cost to extend coverage to everyone, and many issuers’ initial premiums were below actual costs,” HHS said.