Get Ready, Obamacare is Pushing Health Insurance Costs Up Again

Major insurers are already proposing massive increases in health insurance prices for next year, further undercutting Democrats’ promise that Obamacare would reduce health costs for families. Louise Radnofsky writes for the Wall Street Journal:

Major insurers in some states are proposing hefty rate boosts for plans sold under the federal health law, setting the stage for an intense debate this summer over the law’s impact.

In New Mexico, market leader Health Care Service Corp. is asking for an average jump of 51.6% in premiums for 2016. The biggest insurer in Tennessee, BlueCross BlueShield of Tennessee, has requested an average 36.3% increase. In Maryland, market leader CareFirst BlueCross BlueShield wants to raise rates 30.4% across its products. Moda Health, the largest insurer on the Oregon health exchange, seeks an average boost of around 25%.

All of them cite high medical costs incurred by people newly enrolled under the Affordable Care Act.

This is exactly the situation that many prominent Democrats said wouldn’t happen under Obamacare. President Obama repeatedly said that his health plan would “cut the cost of a typical family’s premium by up to $2,500 a year.” Speaker Nancy Pelosi promised, “Everybody will have lower rates, better quality of care and better access.” And Majority Leader Harry Reid promised that families “who buy insurance in the new marketplace we will creates – what we call health insurance exchanges – what they will see is their premiums go down.”

All of that turned out to be wishful thinking at best and blatant falsehoods at worst. After all, as early as 2009, Jonathan Gruber, the now-disgraced architect of Obamacare, was telling anyone who would listen that “there are no cost controls in these proposals” because “we don’t yet know how to control costs in a politically acceptable way.”

Now, three years into the rollout of Obamacare’s major provisions, we now know that the promises were false and that health insurance prices are soaring. Perhaps more troubling, it largely appears that consumers and the media have already become desensitized to the dramatic year-over-year increases and the impact they are having on strained household budgets.

The question is whether the public will continue to turn a blind eye. After all, it appears that this is a trend that will only get worse in the coming years.

Rates are largely increasing this year because insurers are finally getting a grasp on the new population covered by Obamacare, and are finding them to be much sicker than previously assumed.

“This year, health plans have a full year of claims data to understand the health needs of the exchange population, and these enrollees are generally older and often managing multiple chronic conditions,” Claire Krusing, a spokeswoman for America’s Health Insurance Plans told the Wall Street Journal.

But next year could be worse. Not only will higher premium costs further discourage the young and healthy individuals from buying a plan, a population that insurers desperately need to enroll in order to offset costs for riskier populations, but the federal programs meant to act as “shock absorbersg” for insurers dipping their toe into the new market will expire. This, as Stephen Parente, wrote for the Wall Street Journal last year, could put enormous upward pressure on rates in 2016:

The Affordable Care Act includes two temporary programs that make compliant health-care plans temporarily appear far cheaper than they are: Risk corridors and reinsurance. Both programs will expire on Jan. 1, 2017. By November 2016, consumers will know how that sunset will affect their plan’s premium. . .

We estimate that premiums—especially for the cheapest plans—will increase at a much faster rate after 2016. Bronze plans could increase 45% for families, to about $13,000 from $9,000. Individuals could see a 96% spike, to nearly $4,000 from $2,000. Other plan types—silver, gold and platinum—will see smaller, but still substantial, increases. Premiums for cheaper plans will increase at a faster rate because their deductibles will likely decrease to meet ACA regulations starting in 2016.

Something must be done to truly bend the cost curve before average Americans are priced out of the market. But for something to change, the party in control of the White House has to change. So be sure to keep that in mind when you head to the polls in 2016.