No one should be surprised by the news that premiums in Obamacare’s marketplaces will rise, on average, by 22 percent next year for the benchmark silver plan.
Meanwhile, coverage options in many states have dwindled and many Americans getting coverage through state health insurance exchanges and HealthCare.gov have seen their choices of doctors, care providers, and hospitals dramatically restricted.
All of these outcomes for Obamacare were entirely predictable — and critics of the law have warned about these negative effects of the law since its passage in 2010. But will this news have an impact on the election in two weeks, and what must the next president to do address Obamacare’s many shortcomings?
The bad news about Obamacare shouldn’t be shocking, because it is an outgrowth of a fundamental design flaw in the law. Obamacare requires insurers to provide relatively generous health insurance coverage, through health insurance exchanges administered by some states and the federal government, to any American who seeks it. While this might sound like a good thing, the reality is that this requirement is the genesis of the soaring premiums and limited choices we’re seeing today.
At core, the success of a health insurance business (and any insurance business for that matter) is based on an insurer collecting more in premiums than it pays out in benefits. The health insurer relies on a concept known as risk pooling, where enough healthy people sign up to offset the costs in benefits paid out to sicker people. Thus far, Obamacare’s markets have been populated by larger numbers of older and sicker Americans. At the same time, the law prohibits insurers from scaling back the generosity of benefits in their plans.
The result, then, is that insurers have either raised premiums to compensate for the relatively “bad risk” they’ve had to assume, or narrowed the networks of physicians, hospitals and other health care providers that plan enrollees have access to. And, in some states, insurers have simply decided that offering coverage is too risky of a financial bet.
The law did create a mechanism to help adjust for the added risk that insurers might have to take on because of these dynamics — in short, taxpayers would help to make up for any extraordinary losses that insurers experienced by participating in Obamacare’s health insurance exchanges. But Republicans in Congress — with significant public support — blocked this mechanism from taking effect, calling it a taxpayer “bailout” of the health insurers.
That, in a nutshell, is why you’re seeing headlines about rising premiums, declining competition and narrowing networks of physicians, hospitals and other health providers.
These are very real problems that will haunt those who have been supportive of Obamacare. And the bad news will only linger between now and Election Day, given that 2017 sign-ups for Obamacare begin on November 1. As we enter the last two weeks before the election, Obamacare’s shortcomings should be part of every Republican candidate’s closing pitch to voters.
And while it might not be enough to get Donald Trump over the top in the presidential contest, it could prove to be the difference in competitive races for the U.S. Senate — particularly in those states where premium increases in 2017 are expected to be especially severe, such as Arizona and Pennsylvania. It will even be a problem for Democrats in states where the rate hikes will track closely to the expected national average increase of 22%, such as North Carolina and Missouri.
Perhaps that’s why you’re hearing so many Democrats — including Hillary Clinton — concede that the law “isn’t perfect” and needs reforms. But tweaks alone won’t solve the fundamental problems the law faces.
Worse yet, some Democrats have proposed the creation of a public option or plan to compete with private plans, but that would only put taxpayers at greater financial risk and diminish competition amongst private plans in some states. It’s also seen by many analysts as a stalking horse for the creation of an unsustainable, single-payer health care system.
But Republicans cannot simply call for repeal of Obamacare alone — they must couple it with proposals to lower premiums by providing consumers with a wider choice of health plan designs, rather than the one-size-fits-all plan structure currently mandated by Obamacare.
They should also advocate for more fundamental health reforms, such as those contained in House Speaker Paul Ryan’s “Better Way” agenda, that reorient the majority of control in our health care system away from government and toward the consumer.
Obamacare’s travails make it a legitimate campaign issue as we enter the final two weeks leading up to Election Day. Republican candidates for Congress would be wise to place it at the center of their argument for why voters should send them to Washington on November 8.