Obama Administration Confirms Double-Digit ACA Premium Hikes

BREAKING: Obama administration says https://t.co/Elaw2I8wgo premiums will go up by double-digit percentages next year.

— The Associated Press (@AP) October 24, 2016

by Gaius Publius

It's not looking good for the ACA, commonly called Obamacare. From the AP:

Obama administration confirms double-digit premium hikes

WASHINGTON (AP) — Premiums will go up sharply next year under President Barack Obama's health care law, and many consumers will be down to just one insurer, the administration confirmed Monday. That's sure to stoke another "Obamacare" controversy days before a presidential election.

We can pause here briefly. First, premiums will go up. Second, markets (choices) will contract. A feature of neo-liberal rule is an increase in monopolies and inflated prices. And without doubt the ACA is right up the neo-liberal alley. Even the much-wanted Public Option was killed by the way Obama and his people manipulated the Senate version.

But onward (emphasis mine):

Before taxpayer-provided subsidies, premiums for a midlevel benchmark plan will increase an average of 25 percent across the 39 states served by the federally run online market, according to a report from the Department of Health and Human Services. Some states will see much bigger jumps, others less.

Moreover, about 1 in 5 consumers will only have plans from a single insurer to pick from, after major national carriers such as UnitedHealth Group, Humana and Aetna scaled back their roles.

"Consumers will be faced this year with not only big premium increases but also with a declining number of insurers participating, and that will lead to a tumultuous open enrollment period," said Larry Levitt, who tracks the health care law for the nonpartisan Kaiser Family Foundation.

This all gives fodder to Republican opponents, of course, and the article points that out. The Yes-But from the administration looks like this:

The vast majority of the more than 10 million customers who purchase through HealthCare.gov and its state-run counterparts do receive generous financial assistance. "Enrollment is concentrated among very low-income individuals who receive significant government subsidies to reduce premiums and cost-sharing," said Caroline Pearson of the consulting firm Avalere Health[.]

But an estimated 5 million to 7 million people are either not eligible for the income-based assistance, or they buy individual policies outside of the health law's markets, where the subsidies are not available. The administration is urging the latter group to check out HealthCare.gov.

One problem is that, as the plan is designed, it becomes welfare via the subsidies at the same time that it stops being a right that everyone can afford. It's one thing to subside low-income households; it's another to make the the products of the plan unaffordable without subsidies to middle-income households. In a slightly more extreme version, it would be a gift to the poor and only that. Again, welfare.

The Clinton solution to this appears to be more of the same, at least as the AP puts it:

Clinton has proposed an array of fixes, including sweetening the law's subsidies and allowing more people to qualify for financial assistance.

Is the ACA poised to collapse? It's hard to say. On the one hand, even the insurance companies are withdrawing from what looked designed as a "health insurance industry protection scheme," complete with mandated purchases. Increasing unaffordability and lack of market choice — with the resultant effect of little competition — are likely making this patched-together program (relative to Medicare or any single-payer alternative) quite unpopular.

On the other hand, the relentless Republican attacks on any health insurance plan offered by Democrats is bound to stimulate that "rally 'round our Party" enthusiasm on the part of cultural Democratic Party voters, which might allow it to limp along for a while.

Will the ACA be fixed? Not with a Republican-controlled House and perhaps Senate, and not if Clinton restricts her proposals to increased subsidies. After all, the only real fix is to revert to the original LBJ-era plan — well-funded publicly-run health insurance for all citizens as a right (like the Sanders plan), or at the very least least, inclusion of a Public Option into ACA that simulates Medicare and is offered as a competing nonprofit alternative to private insurance products — or an insurer of last resort, if it comes to that.

As to the Public Opton, note this from last July:

Clinton Reaffirms Support For Public Option In Bid For Sanders Supporters

Sanders gushes, saying the health care proposals "will save lives.

Hillary Clinton reaffirmed her support on Saturday for creating a “public option” within Obamacare and allowing people to enroll in Medicare at age 55.

The presumptive Democratic presidential nominee also called for a substantial increase in funding in medical clinics that serve low-income Americans, fully embracing a proposal from Sen. Bernie Sanders (I-Vt.).

While Clinton has long supported the creation of new government-run insurance options and reiterated that support several times this year, Saturday’s statement comes three days before she is scheduled to make her first joint campaign appearance with Sanders ― who has championed government-run insurance and federally financed clinics throughout his career and during his own bid for the presidency.

I read this as two proposals, one to offer a "public option" (described below) to everyone, and one to lower Medicare eligibility to age 55. About the public option:

The idea of the public option ― as first sketched out by Jacob Hacker, a Yale political scientist ― is to create a separate, government-run insurance plan that would compete with private insurers offering coverage through the Affordable Care Act’s exchanges. The hope is that this competition can help keep premiums for all the insurance plans low, particularly if the government-run plan has the ability to dictate low reimbursement rates to doctors, hospitals, drugmakers, and other suppliers of medical care.

Definitely a step in the right direction. Will this actually be proposed? Perhaps, but it's a campaign promise, like Obama's promise to the unions to pass the Employee Free Choice Act (EFCA), which was introduced into an all-Democratic Congress in 2009 and then left to lie. If a public option proposal is introduced into this Congress, the odds of it passing are nil.

So to answer the original question — will the ACA be fixed? — I would say the chances are slim to none. Stay tuned; ACA may not be on thin ice now, but it could be getting close.

GP