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Bankrupt Healthcare
Obamacare Premiums to Rise 7.5 Percent

Even the generally Obamacare-boosting Vox delivered its readers some bad news about the Affordable Care Act today:

No matter how you slice the numbers, Obamacare premiums will rise significantly next year. The Obama administration estimates rates will rise 7.5 percent in 2016, compared with 2 percent in 2015.

Insurance markets are complicated. But the story of Obamacare’s 2016 premium increase is actually pretty simple: Many health plans — even those with decades of experience selling insurance — underestimated how sick health law enrollees would be. […]

As prices get higher and as some health insurers scale back their benefit plans, there is the possibility that some consumers might decide coverage isn’t worth it. Premera Blue Cross in Alaska already found that new members who joined the plan in 2015 had health care costs 40 percent higher than those who did not renew.

Vox notes that the big question going forward is whether hikes will be the “new normal.” One fear is that the premium increases currently being phased in will push some healthy people out of the marketplaces (a circumstance that could in turn lead insurers to raise premiums again next year). The Vox piece doesn’t come down especially hard one way or the other on the question of how the hikes will effect enrollment, noting arguments and evidence on both sides. How consequential these hikes will be remains an open question.

But in the meantime, it’s important to look at the bigger picture. President Obama and ACA supporters seized on early premium numbers as evidence that the ACA was working. The Vox piece now admits that those initial numbers were not sustainable. Will other ACA proponents now admit that the law isn’t bringing down costs for Americans they way they thought it was?

Moreover, ACA or not, the U.S. healthcare system is too expensive. Thanks to ACA subsidies, more people have health insurance today than before the law was passed. But unless we address our cost problem, these subsidies will become harder to pay for, and the economic architecture of the law will be stretched even further. As we wrote before: “The authors of the ACA chose to address coverage rather than underlying cost issues, and that decision is slowly but surely coming back to haunt them.”

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  • Larry Duer

    7.5% would have been wonderful. My increase before subsidy was 32% for a Silver plan and a $2500 deductible for both myself and wife.
    PS. I saw a doctor once in 2015.

    • Andrew Allison

      My wife’s Bronze is up 21% after subsidy, with a 20% increase in deductible, to $6K. Thanks Barack!

  • Boritz

    “Will other ACA proponents now admit that the law isn’t bringing down costs for Americans they way they thought it was?”

    This week there have been television commercials for ACA that stress that most people who go to Healthcare.gov will receive subsidies with premiums costing them around $57/month; so there is one proponent that admits nothing.

    • Andrew Allison

      Yes, and the weekly ads and mailings from Anthem promise even less — of course you do have to be just barely ineligible for Medicaid to get that rate, but who cares about the truth when ACA is concerned.

  • coffeetime

    The rise in premiums is not the whole story. Next year, our base insurance premium will go up from $980.87 to $1,130.60 – a 15% increase. However, our current tax credit will fall from $679 to $672 a month, meaning that our out-of-pocket premium will go from $301.87 to $458.60 – a whopping 52% increase. I never see that mentioned while reporting on premium increases.

  • WigWag

    “The authors of the ACA chose to address coverage rather than underlying cost issues, and that decision is slowly but surely coming back to haunt them.” (Via Meadia)

    Absolutely right, but there’s a reason for that; slowing the growth in health care costs is really hard politically. To slow or reduce health care inflation you have to address the elephant in the room; salaries and other forms of compensation make up the lions share of health care costs. To make health care cost less, compensation for physicians needs to be significantly cut. So does compensation for nurses, technicians, phlebotomists, orderlies, physical therapists, hospital administrators, insurance company bureaucrats and the myriad of other personnel feeding at the healthcare trough. We need fewer health care providers and administrators providing more and better services to health care consumers and we need those not forced out of the field to earn less money. Without doing this, none of the other measures designed to curb health care costs will make a damn bit of difference. Solving the malpractice problem won’t, reducing unnecessary procedures won’t, electronic medical records won’t and dealing with drug pricing won’t.

    Unless Democrats and Republicans figure out how to deliver to health care providers and administrators a dose of the medicine that airline pilots, UAW members and taxi-fleet owners have had forced down their throats, American health care costs will never abate.

    When will that happen?

    I wouldn’t hold my breath.

    • Jim__L

      So, we’re opening the door to higher demand for health care, while simultaneously tightening up supply, and at the same time reducing prices.

      I would only recommend holding your breath if you want to be free of health care problems forever. (That’s legal in California now.)

      • Andrew Allison

        Not exactly. First (sigh) the Orwellian-named ACA is an insurance program which does nothing for healthcare costs. Furthermore wigwag’s way wong (apologies to all for that irresistible alliteration). The solution, as TAI has frequently pointed out, is to make the providers more efficient, not reduce (other than for the administrative bloat) their compensation. There are three legs to this stool: first, clamp down hard on unnecessary procedures and prescriptions* (a huge contributor to the cost of healthcare); second, introduce competition via price transparency, and third utilize IT technology. Let me hasten to point out that I mean IT, and not the frequently less cost-effective “advances” in medical technology.
        *look up the percentages of unnecessary Cesareans, hysterectomies, stents, etc. etc.) performed and the effects of misuse of antibiotics..

        • Tom

          The problem with that first one is the ever-present threat of the dreaded malpractice lawsuit.

          • Andrew Allison

            Agreed, but the solution is to require the plaintiff (or rather their unscrupulous lawyer) to the pay the costs of a BS case, and to limit the damages when there is one.

          • Gene

            Hilarious. In a society in which victimhood is rapidly becoming a positive lifestyle choice for millions of people, and which is undergoing a spasm of retrograde socialist hate for success greater than I’ve seen in my lifetime, you think we’re going to make it HARDER for people to win court victories against doctors/hospitals/health plans? I wish I had your optimism but sorry, I just can’t.

          • grichens

            I don’t see where in AA’s comment optimism is indicated. My wife is a physician in the Caribbean, with colleagues who have trained and practiced all over the world – US, Canada, UK, Germany, South Africa, Spain, Australia, New Zealand, South America etc. – every last one of them are stunned by the level of defensive medicine that is carried out in the United States.
            While thorough investigations are on one hand part of practicing good medicine, the American medical system is famous everywhere but in the U.S. for the amount of unnecessary procedures and tests that are carried out just to protect the practitioner and the facility from frivolous and rent-seeking lawsuits.
            Sure, health care is expensive in the U.S. compared to other countries and it is bankrupting your country as a result. But it is not so much because of internal inefficiencies as it is the silly litigious environment your politicians continue to impose on the health care system – which is naturally passed on to the public.

          • Andrew Allison

            You are exactly right, and I am NOT optimistic. I didn’t suggest that these things are possible, just that costs can’t come down without them.

  • Andrew Allison

    Vox is still boosting ACA. Premium increase are WAY higher than 7.5%

  • D B

    It’s too bad this wasn’t predicted before the bill was passed by the Democrats. You know, it’s important enough to have a name. Let’s see: It’s bad for insurance companies: We could call it “adverse”. Healthy people are choosing not to belong: We could call that choice “selection”. Higher premiums lead to more people opting out which will lead to higher premiums: That’s a “spiral”. And it will end badly: “Death”. “Adverse Selection Spiral Death”. Or maybe, “Adverse Selection Death Spiral”. I wonder why nobody thought of this.

  • MrJest

    A world of “duh”. We told you this back in 2009; you didn’t listen.
    Sucks to be you.

  • Sencho

    “Thanks to ACA subsidies, more people have health insurance today than before the law was passed.”

    Sorry AI, this is a patently false item. The number of people whose policies were cancelled leading up to, and after passage, of the unAffordable Care Act greatly exceeds even the purposely-inflated membership numbers we’ve seen.

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