Open enrollment 2018: Getting better, but needs improvement

Open enrollment 2018: Getting better, but needs improvement
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Whether it’s a website malfunction or political controversy, the beginning of the annual ObamaCare open enrollment period always grabs headlines. But, with the exception of regularly scheduled site maintenance, open enrollment starting this week looks like it may go off without a hitch.

As it begins its sixth year, the Patient Protection and Affordable Care Act is hitting a kind of stride — but it isn’t out of the woods yet. The fate of the law, and the future of American health care, will depend in large part on the actions that policymakers take over the next year.

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The biggest sign that things are looking up for ObamaCare was the announcement this month that, in 2019, average premiums for benchmark silver plans will decrease by 1.5 percent — the first time average premiums have dropped since the insurance exchanges opened in 2014. To put this in context, between 2017 and 2018, benchmark premiums rose 37 percent. Earlier this year, the Congressional Budget Office predicted that benchmark premiums would increase 15 percent in 2019.

As insurers across the country lower their premiums, they’re also poised to increase their participation on the government exchanges — a far cry from the fear of mass insurer exodus pervasive in years past. This is good news for anyone shopping on the exchanges, and it points to an increasingly healthy market. Many experts are calling this year’s decrease in prices a “correction” to last year’s excessive premium hikes, driven by insurers to insulate them from a market collapse that never came.

Despite the hysteria surrounding the repeal of the individual mandate, things seem to be going just fine without it. And yet, Democrats continue to claim that repealing the mandate was a last ditch effort by Republicans to sabotage ObamaCare after their repeal-and-replace efforts failed.

This is preposterous. A Manhattan Institute report released last year demonstrates that the individual mandate was both unnecessary and unfair. The mandate may have forced everyone to buy ObamaCare plans, but it is the law’s subsidies — which grow automatically as premiums increase — that make insurance affordable to low-income Americans.

Advocates argued the individual mandate was a necessary part of ObamaCare, because the premiums paid by healthy enrollees would subsidize the coverage of those with pre-existing conditions. In reality, the mandate was a tax — and a bad one, at that. So many people were exempt from the mandate that only around 5 percent of taxpayers were subject to it. At the end of the day, 79 percent of households that paid the mandate tax had incomes of less than $50,000 a year.

Faced with persuasive evidence that the individual mandate did more harm than good, Democrats would be wise to put down their bullhorns and explore other reasonable insurance reforms. Instead, they’re doing precisely the opposite — doubling down on claims of sabotage and mounting a full-frontal assault on short-term, limited-duration insurance. These affordable plans — which can be priced in proportion to enrollees’ likely medical risks — effectively were sidelined by a regulation released toward the end of President Obama’s tenure.

Next to repealing the mandate, the Trump administration’s support of short-term insurance is one of the most significant health care reforms of the past few years. For $430 a month, a 27-year-old nonsmoker in Tulsa, Oklahoma, could get a benchmark silver plan with a $3,250 deductible. Alternatively, for $80 a month he or she could get a short-term plan with a $2,500 deductible — a cheaper and more generous option. Similar 27-year-olds are less lucky in New York, where short-term insurance is banned and benchmark premiums total $566 a month.

Opponents of short-term insurance claim these plans will cause premiums to skyrocket by drawing healthy people away from the exchanges. But the Congressional Budget Office estimated that widespread availability of short-term plans would cause premiums for unsubsidized, wealthier consumers to rise only 2 to 3 percent — an increase that will be negated by the recent suspension of ObamaCare’s Health Insurance Tax.

In spite of this, blue states, including New York, New Jersey and California, have chosen to take these affordable plans off the table. If they’re serious about providing affordable coverage that meets the needs of their citizens, they’ll reconsider.

ObamaCare never was perfect and, to be sure, it still isn’t. Though recent reforms have gone a long way toward relieving burdens of the law, there still is room for improvement. If policymakers remain open to patching ObamaCare’s flaws and supporting affordable alternatives, things may look even better when the next open enrollment period rolls around.

Tim Rice is deputy director of health policy at the Manhattan Institute, which promotes free-market ideas. Follow him on Twitter @timerice1.