It's 2014 all over again. Remember how Republicans and conservative media (
and the Kochs were all about how Obamacare was going to send premium rates soaring in 2015? And remember how
that didn't happen? Well, as Sarah Kliff explains,
they're back at it, and while it's too soon to say definitively, they'll probably be wrong again.
The Wall Street Journal ran a recent op-ed titled "The Unaffordable Care Act." Slate asserted "Obamacare's Bill is Due." And, in its typically sober headline format, the New York Times noted "Health Insurance Companies Seek Big Rate Increases for 2016."
All of these articles make a similar argument: This is the year that Obamacare premiums go up. Way up. Most of them cite a recently approved 25 percent rate hike for the largest Obamacare plan in Oregon, Moda Health. And they look at similarly big increases that insurers in North Carolina and Tennessee have proposed.
So what about these big hikes? Isn't that evidence that Obamacare is soon going to be too expensive for the people it's supposed to be helping. (It's worth noting here nearly universal support from Republicans and the conservative media for the one thing that would have really made premiums unaffordable—the Supreme Court striking down subsidies in the
King case.) Kliff talked to actual experts in health economics, and they reiterate there's no reason to panic. Number one, it's far too early to know yet how rates will fall out.
"This is going to vary dramatically across the country," says Elizabeth Carpenter, a director at health research firm Avalere Health. "Each state has a different process for releasing rates, and the bottom line is it will probably be very close to enrollment when we actually have a complete picture."
What's happening now is that insurers are putting forward their proposals, to which the states will respond. These proposals aren't set in stone, but are more or less opening bids. Insurers want to make sure they have plenty of room to negotiate and they're also waiting to see how the other insurers they're competing with will price plans. States can reject huge increases, and the insurers know this, so they're giving themselves room to get as much as they can. At the same time, they're looking at the past two years of coverage and figuring out what it might cost with new customers coming in next year. Pent-up demand by the uninsured has meant that people are using their new insurance, and it is costing insurers. At the same time, insurers haven't been strapped in providing this coverage. They've still spent between 81 and 87 percent of subscriber premiums on medical care," meaning they didn't have to eat into administrative costs or profits in order to maintain coverage.
Another possible driver for insurers to increase rates is that the reinsurance program in the law is expiring. That's the provision that Republicans have attacked as a "slush fund" and an "insurer bailout," but what was in reality a pool of funds insurers actually paid into to even out coverage costs. If one company ended up taking on a lot of very sick, expensive people than they had predicted when they set rates for that year, this transitional fund was there to help cover those higher costs. It's ending now, so companies might be wanting to give themselves some cushion.
But here's the bottom line for Obamacare consumers. There are protections built in to contain rate increases and there is also competition. That means that people can shop around for the best deal for them, something insurers are very much aware of. It's not the most convenient thing always to have to change insurers, but this year Obamacare customers showed they were wiling to do that to get the best deal for them. There's no reason to think that will change for 2016, which means there's little reason to believe we'll see double digit rate hikes across the board.