Federal Government Admits Obamacare Premiums Soaring by 25%

Samsung’s exploding Galaxy Note 7 is an apt comparison to the struggling Obamacare, but not one that anyone expected President Obama to make about his signature policy achievement.

“When one of these companies comes out with a new smartphone,” he said, “and it had a few bugs, what do they do? They fix it. They upgrade—unless it catches fire, and they just—then they pull it off the market. But you don’t go back to using a rotary phone.”

The Samsung Note 7 was meant to be a game changing device, a powerful smartphone that would upend the market with its speed and power. Instead, users began to claim that the phone was overheating, catching fire, and even exploding. Samsung executives debated how to respond, but rather than recall all of the phones, they relied on the results of a hasty laboratory test that suggested that the issues were limited to only batteries from a single manufacturer

Two weeks later the company was forced to admit that they were wrong. All of the phones were potentially compromised, including the supposedly safe replacements the company sent to affected customers. They then took the unprecedented step of killing the phone and doing a global recall.

That, in many ways, is also the story of Obamacare. The law was passed with big promises about how it would lower costs for families, allow everyone to keep their health plan and their doctor, and reduce the deficit. But almost immediately after it was passed things started going awry. First, the website didn’t work, leading to some hasty fixes and an extension of the open enrollment period. Then the law’s much-ballyhooed insurance cooperatives began closing their doors. Then insurance companies started to drop out of the exchanges. And now premiums are beginning to soar.

Just this week the federal government announced that premiums would be rising by an average of 25 percent in 2017, a steep price hike spurred by a sicker-than-expected population. Amy Goldstein reports for The Washington Post:

Insurers are raising the 2017 premiums for a popular and significant group of health plans sold through HealthCare.gov by an average of 25 percent, more than triple the increase for this year, according to new government figures.

The spike in average rates for the 38 states that rely on the federal marketplace created under the Affordable Care Act was announced by federal health officials on Monday. The figures serve broadly to confirm what has become evident piecemeal in recent months: Prompted by a burden of unexpectedly sick ACA customers, some insurers are dropping out while many remaining companies are struggling to cover their costs. …

An accompanying HHS research brief containing the overall patterns and state-level data also shows that health plan options are dwindling, although almost all ACA shoppers will have some choice of plans for 2017.

Sadly, many Americans will see premiums soar well above that marker. In places like Arizona, Illinois, Montana, Oklahoma, Pennsylvania and Tennessee, the market-leading insurer is raising rates more than 50 percent.

“The situation is serious,” Alissa Fox, senior vice president of the Office of Policy and Representation for the Blue Cross Blue Shield Association told the Wall Street Journal. “The reason the premiums are where they are is that the people we are covering have serious conditions and they’re using a lot of medical services because of their chronic illnesses. That’s clear. And there’s not enough young, healthy people to balance out those costs.”

The reason young adults aren’t signing up isn’t exactly a mystery. They’re being dramatically overcharged. According to an analysis done by the Heritage Foundation, young enrollees are paying 44 percent more than they otherwise would as a result of Obamacare regulations.

Nevertheless, President Obama refuses to see the inherent flaws in his approach, demanding that Republicans work to fix the law rather than replace the law.

But it’s not, as Obama suggested in his speech, that Republicans want to ban the smart phone and go back to a rotary phone, it’s that we want to built a smart phone that works. And although President Obama refuses to acknowledge them, Republicans have offered myriad plans which would re-instill free market principles into the insurance market while preserving the coverage gains made by Obamacare.

Samsung was forced to pull its product off the shelves because it just wasn’t working. It’s time to admit the same logic applies to Obamacare. Let’s pull it off the shelves and give other ideas their chance in the marketplace.