Obamacare’s Sky-High 2017 Rates are Finally Announced

Reports have been popping up since the summer that the 2017 premium rates for Obamacare would be increasing – by a lot.  In addition, for more than a year, insurers have been announcing they will no longer participate in many of the Obamacare exchanges.

On Monday, and just 16 days prior to the election, the Department of Health and Human Services (HHS) released a research brief, “Health Plan Choice and Premiums in the 2017 Health Insurance Marketplace.”  Inside the brief is the official data that confirms what everyone already knows:  the Affordable Care Act is not so affordable.  Premiums will increase in the benchmark Silver plans at an average rate of 25 percent and more insurers are choosing not to participate in Obamacare Marketplace exchanges because they have lost millions of dollars since 2014, the first year Obamacare officially began operations.

HHS boldly pointed out in their October 24, 2016 press release that “more than 70 percent of consumers can find Marketplace plans for less than $75 per month” and they note that “85 percent of current Marketplace consumers receive tax credits that bring down the cost of coverage, and, nationwide, about the same percentage of Marketplace-eligible uninsured Americans also have incomes that could qualify them for tax credits.”

So … what’s the big deal if 85 percent of participants won’t even notice the substantial price increases?

One always needs to carefully read Obamacare cheerleaders Kafkaesque utterances because most of the time, they conveniently leave out important facts or massage their words.  For example, the press release only discusses those participating in the exchanges, never mentioning that a lot of people do not purchase their health insurance through the Marketplaces.  The reason why is the Marketplaces are the only venue people can receive tax credits that reduce their premium costs and tax-payer financed cost-sharing subsidies to lower out-of-pocket costs.  People with household incomes of more than 400 percent of the federal poverty level, or approximately $47,080 for an individual or $97,000 for a family of four, are not eligible to receive these credits and subsidies and generally do not purchase their insurance through the exchanges.  According to Robert Laszewski, who writes the Health Care Policy and Marketplace Review blog, 50 percent of those who purchase an individual health insurance plan are not eligible for a subsidy.

While the second-lowest Silver plans will experience an average premium increase of 25 percent, these means other plans will have much higher premium increases.  By looking at HHS’s report, one can see the high costs many citizens will pay.  Here are some examples of the increases:

For a 27-Year Old for the Second-Lowest Benchmark Silver Plan (see page 20, table 6.)

• In Alabama, average monthly premiums will go up 58 percent, from $244 to $384.
• In Arizona, average monthly premiums will go up 116 percent, from $196 to $422.
• In Oklahoma, average monthly premiums will go up 69 percent, from $251 to $424.
• In Tennessee, average monthly premiums will go up 63%, from $236 to $385.

The report also catalogs how many insurers will remain in the states for 2017.  In 2016 there were a total of 232 Marketplace issuers of health insurance plans.  For 2017, there will be 167.  In fact, 14 states will have 2 or less insurers available to consumers.  Here are some examples of the decreases:

• In Arizona, in 2016 there were 8 insurers, in 2017 there will be 2.
• In Florida, in 2016 there were 10 insurers, in 2017 there will be 7.
• In Ohio, in 2016 there were 16 insurers, in 2017 there will be 11.
• In Pennsylvania, in 2016 there were 13 insurers, in 2017 there will be 8.

Ever trying to ignore the disaster facing them, the HHS report points out that if a consumer simply chooses to switch to the lowest premium plan within a metal tier, their premium costs could down by 20 percent.  They do not mention doing so usually means dealing with a much higher deductible, perhaps as much as $6,000, before insurance even kicks in.

Since 2010, free-market healthcare advocates have been predicting that Obamacare would eventually enter a death spiral.  The law’s over-prescriptive mandates and regulations have driven up costs and have encouraged many people, particularly young and healthy adults, to choose to pay the penalty instead of purchasing insurance.  This leads to adverse selection in which only those with chronically high medical bills continue to purchase and utilize insurance, while younger, healthy people choose not to.

The only way Obamacare can be “saved” is with an infusion of billions of tax dollars propping it up on a yearly basis.  Let’s hope most Americans understand the folly in doing so and reject the idea of saving this greatly flawed healthcare policy.

The better route is to repeal and replace Obamacare with a plan that will put the purchasing power in the hands of consumers that will allow them to buy the kind of health insurance plan they want and need, not the one Washington politicians and bureaucrats dictate they must have.