Health insurers are beginning to announce their 2019 premium increases for the dwindling number of Americans who participate in ObamaCare exchanges and it isn’t a pretty picture.
Most increases in Virginia and Maryland appear to be in the 20 percent to 35 percent range, through CareFirst BlueCross BlueShield. The insurer also is seeking a 91 percent increase for its PPO plans in Maryland and a 64 percent increase in Virginia for 4,500 members, who participate in the exchange.
While the Affordable Care Act passed in 2010, most of its insurance reforms didn’t begin until 2014. Health insurers began reflecting those changes in their 2014 premiums, which were announced in 2013.
The initial premium increases were moderate, reflecting higher costs imposed by the new coverage mandates, such as covering preventive care with no out-of-pocket costs, ending lifetime spending limits, etc. In addition, insurers bumped up premiums because of increased costs associated with having to accept applicants with major medical conditions.
Actuaries didn’t know how to price all of those changes, and insurers quickly realized that claims costs were much higher than anticipated. More dramatic premium increases began in ObamaCare’s second year, 2015, but even that didn’t stop the financial bloodbath.
UnitedHealthcare announced in late 2015 it would be pulling out of the ObamaCare exchanges because it lost $720 million in the individual market in 2015.
The Texas Blue Cross parent company, which controls plans in five states, lost a reported $2 billion in 2015. Aetna said it lost about $140 million on the individual market in 2015, and Humana about $1 billion.
Texas BlueCross shifted all of its insureds to ObamaCare-qualified policies in 2015. For some people their deductible went from $2,500 to $6,000 and the premiums rose by 50 percent. But at least she still had a reasonably good policy, even if it was significantly more expensive.
But in July of that year BlueCross announced it was cancelling that policy for 367,000 Texans because the company had lost $400 million. BlueCross offered a substitute HMO policy for 2016, but it was more expensive and many health care providers were no longer included.
The impact of those ever-increasing premiums has been significant. Last year the U.S. Department of Health and Human Services (HHS) released an assessment of premium increases under ObamaCare. It claims that “average exchange premiums were 105 percent higher in the 39 states using Healthcare.gov in 2017 than average individual market premiums in 2013.”
However, Trump was elected in November 2016, after insurers had already announced their 2017 premiums. That 105 percent increase over four years was pre-Trump, and consistent with the current 25 percent to 30 percent one-year increase in some Maryland and Virginia policies.
The 2018 premiums, and the coming 2019 premiums, are the only ones that reflect any possible Trump policies. The individual market was in free-fall long before that.
Yes, Trump’s decision last October to stop making the monthly “cost-sharing reduction” payments — money that reimbursed health insurers for reducing lower-income ObamaCare enrollees’ out-of-pocket costs — likely did, or will, put upward pressure on premiums. But that step just exposed the true cost of the premiums that taxpayers were covertly subsidizing.
Ending the individual mandate to have coverage may also have an impact if more people leave ObamaCare. But the only reason the vast majority of people remain in ObamaCare’s exchanges is not the mandate, but the fact that taxpayers are subsidizing, on average, about 86 percent of the cost of the policies. Why leave if the coverage is free — or close to it?
The current premium increases are mostly a result of ObamaCare entering what’s known as the “death spiral.” That’s were premium increases drive out the young and healthy, leaving the pool smaller and sicker, which requires even higher premiums the next year, and so on until the pool collapses.
According a recent Center for Medicare and Medicaid Services (CMS) paper, as of March 11.8 million enrolled through the federal and state health insurance exchanges. That number is down from 12.7 million in 2016, which marked the peak for exchange enrollment, and 12.2 million in 2017.
Worse yet, CMS says the percentage of younger participants (age 18-34) continues to decline while the percentage of older participants (55+) continues to rise. That’s the death spiral in action. It’s not Trump’s fault, it’s the predictable — and predicted — result of ObamaCare.
As more premium increases are announced heading into the midterm elections, Democrats will do their best to blame Trump for a problem that is entirely of their own making.
Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas, Texas. Follow him on Twitter @MerrillMatthews.