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ACA Agonistes
ACA Rate Increases Go National

Earlier this year, when insurers across the country put in requests for big rate increases for their ACA plans, some hoped that state regulators, who have the power to review requests, would not approve the biggest price hikes. An early sign from Oregon was not encouraging—and now an article in the WSJ confirms the bad news:

Kentucky Insurance Commissioner Sharon Clark approved the 25.1% increase requested by the Kentucky Health Cooperative, the largest insurer on the state’s insurance exchange […]

Oregon’s Laura Cali allowed an average 25.6% increase for Moda Health Plan Inc., the biggest plan on that state’s exchange. In Ohio, Lt. Gov. Mary Taylor approved a 14.5% increase from Medical Mutual. In Michigan, BlueCross BlueShield won approval for the average 11.4% increase from insurance director Patrick McPharlin.

In Idaho, insurance director Dean Cameron said that an average 23% increase by Blue Cross of Idaho Health Service Inc., was disappointing but “not unreasonable” and that he didn’t have the power to stop it.

The article is quick to point out that not all states are seeing high increases; indeed, some states are only seeing small upticks. But the trend is showing in enough states that it should worry ACA supporters. They might be quick to point out that consumers won’t have to bear the full brunt of these increases because federal subsidies make the care more affordable. But that response reveals a classic—and dangerous—band-aid approach to policy. Pumping more money into an unsustainable system by subsidizing consumption might make things somewhat better for consumers in the short term, but it’s an approach that yields diminishing returns as the system begins to groan under its own weight.

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  • lord acton

    “It’s just a boatload of federal money to take and spend on poor people’s healthcare,” – Supreme Course Justice Elizabeth Kagan

  • Andrew Allison

    The rate increases are an inevitable result of costs imposed on the insurance companies by the law’s mandates. As regular readers know, I’m no fan of private health insurance (nor, as I have to keep reminding people, of single-provider health care), but the regulators have no choice but to approve rate increases based on claims experience. I’m more concerned about the fact the the increases are being paid by the taxpayer (the subsidies are based on income, not the nominal premium). In other words, ACA to all intents-and-purposes, is single-payer health insurance with a 25% overhead paid to private insurance companies.

    • http://westernhero.blogspot.com/ Silverfiddle

      Indeed. This is socialized medicine by the back door.

      • Andrew Allison

        Sigh. Like like Medicare and Medicaid, it’s socialized health INSURANCE!

        • rheddles

          I wish I could hit the up button 15 times.

    • iconoclast

      “…with a 25% overhead paid to private insurance companies.”

      crony capitalism at it’s very best!

      • Andrew Allison

        Yup. ACA was written by and for the private insurance and healthcare industries, and only Democratic party reprehensatives voted for it.

  • http://westernhero.blogspot.com/ Silverfiddle

    I guess that cost curve Obama’s wonks talked of bending down has snapped back the other way…

    • Government Drone

      This is not the “snapback” we wanted!

  • iconoclast

    “Pumping more money into an unsustainable system by subsidizing consumption might make things somewhat better…”

    Look how well this approach has worked for higher education!

    • Boritz

      Wasn’t there an entire country the other side of the north pole that tried to function with a totally artificial ‘market’ for about 70 years before trying it some more.

      • iconoclast

        Hard to say. After all, comparing unsustainably buying votes to a political system whose economic theory bears more resemblance to cargo cult worship is very difficult. Rather like trying to compare someone who suffers from mild depression to someone suffering from full-blown psychosis complete with visual and auditory hallucinations.

        • Boritz

          I see it more like the woman who said no to $100, no to $1000, but yes to $5000. We are manifesting the camp we belong to.

  • ljgude

    It is written into the ACA that healthcare costs cannot increase beyond 17.6% of GDP by 2017. We went into the ACA at 16% of GDP and according to articles on this blog we have been at 17.5% for some time now. During the debates with Hillary Obama said impressively something like the healthcare industry will have a seat at the table, just not every seat. I think it is fair criticism to say that is exactly what the Democratic congress gave the healthcare industry – every seat at the table and they have been pigging out ever since. The only other country that funds healthcare entirely through private insurance is Switzerland and it costs 11% of Swiss GDP. Most other modern countries have some combination of public and private healthcare and the two systems compete in a certain fashion. I know the Australian system best and everyone is covered under Australian Medicare for which most taxpayers pay a levy. If you want and can afford it you can buy private insurance that gives you choice of doctor and access to the private hospital system. The basic competitive structure is that if private insurance gets too pricy people drop it and rely on the public system. if the waiting lists and other well known problems of socialized medicine get too long or too onerous then people take out insurance. The private system works hard to be good value and that takes pressure off the public system allowing it to do more for people with less money. I advise anyone who can afford ti to take out private insurance. My premiums are about US$2000 a year and I pay a penalty because I waited too long to take out private insurance. Still families can get private insurance at non onerous rates and it not normally a panic situation to find yourself unemployed and unable to pay the premiums. All that at about 10% of GDP. The system has its problems but compared to where the US has gotten itself its a tropical paradise. BTW the health outcomes in the US and OECD countries are very similar – the US is the outlier only of the cost side, not the result side.

    • Andrew Allison

      As you wrote, a Democratic Party controlled Congress gave the insurance and healthcare industries every seat at the table. As you also point out, Switzerland’s private health insurance manages to deliver healthcare for about two-third the cost of the USA’s. and the fictitious “socialized medical insurance” bogeyman is exactly that. I do, however, wish that you hadn’t suggested that outcomes in the US and OECD countries are very similar — notwithstanding the claims that the data are not comparable, the outcomes are clearly different — not, perhaps, as significantly so as the cost disparity, but still significant.
      By any measure, the ridiculously costly US system fails to match the cost/benefit ratio of other OECD countries

      • ljgude

        I think the health outcomes are very similar in the developed countries and I think the data are comparable and many rankings are published. The US outcomes are not at the topm but they are not bad considering that some people don’t have much access to healthcare. I think we agree that it is US costs that are the outlier. Perhaps the best overview of world health is Hans Rosling’s 2007 TED talk. https://www.youtube.com/watch?v=hVimVzgtD6w Medical outcomes are improving dramatically all over the world and the US, while a leader in medical innovation, is not delivering at competitive prices.

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