Category: New Health Care Law

Obamacare 2016 Average Rate Hike 8 Percent

HealthcaredotgovWe are already anticipating double-digit premium hikes for Obamacare plans in 2017, based on insurance filings in a sufficient number of states to show the trend.

Obamacare’s defenders point out two limits to these leading indicators. First, they are requested, not approved rate hikes. Second, Obamacare beneficiaries can trade down. A person whose plan hikes premiums double digits can switch to a plan with a lesser increase. Both criticisms are fair.

Nevertheless, now that the dust has settled on 2016, and all the data on this year’s enrollment analyzed, we can confirm from two pro-Obamacare sources that premiums in Obamacare’s exchange plans increased by an average of eight percent from 2015 to 2016. General measures of price changes, such as Consumer Price Inflation, were effectively flat over the period. That is, the eight percent Obamacare premium hike was a real, not nominal, price hike.

Obamacare Exchange Average Premium Hike 16 Percent Next Year

CAM00109Caroline F. Pearson of the Avalere consulting firm has surveyed states which have already published 2017 Obamacare exchange premiums. Among eight states and the District of Columbia, the average requested rate hike is 16 percent for popular Silver plans:

Specifically, average proposed rate increases across all silver plans in the nine states examined range from 44 percent in Vermont to 5 percent in Washington. In 2016, 68 percent of exchange enrollees selected silver plans.

According to the data, in most states, proposed premiums for lower cost silver plans increased less dramatically or even went down for 2017, compared to higher-cost plans on the same tier. Lower-cost silver plans tend to be most popular with consumers, making this portion of the market more competitive as plans seek to attract enrollees.

The devil is in the details: The lowest premium Silver plan is going up seven percent, and the second lowest 8 percent, which means most Silver plans are going up more than 16 percent.

Do We Have to Work for Nuns To Dodge Obamacare’s Mandates?

r-NUNS-BIRTH-CONTROL-large570Obamacare’s opponents are cheering the Little Sisters of the Poor’s apparent victory over Obamacare’s mandate to cover artificial contraception, about which I wrote when the controversy first erupted.

The Little Sisters defied the mandate, which is contrary to their Catholic faith. The mandate is (obviously) not relevant to the nuns themselves, but to their lay employees who work in the Little Sisters’ nursing home and are covered by their plan.

The Supreme Court decision is not complete victory: SCOTUS vacated judgments and fines approved by lower courts and sent the case back to lower courts to give the Administration time to find another way to get contraceptive coverage to the Little Sisters’ lay employees.

Bravo to the nuns for standing up to Uncle Sam. However, I am increasingly concerned that advocates of small government have surrendered a lot of ground in the fight for individual liberty. Unless a person or persons have a sincerely held religious objection to a federal mandate, they have to obey. This principle is problematic.

Administration Still Bailing Insurers Out of Obamacare Exchanges

money-rollsThe Obama Administration refuses to concede defeat in its struggle to save Obamacare’s exchanges. The exchanges lost one quarter of their members in 2015. The Blue Cross Blue Shield Association has reported its insurance plans have enrolled people significantly sicker (and more expensive) than anticipated. Finally, UnitedHealth Group, the nation’s largest insurer, will drop out of most of the exchanges in which it is participating.

Desperate to induce insurers to continue participating in exchanges, the Administration suggested it would make illegal payments from “risk corridors,” a risk-mitigation mechanism that moves money between insurers to stabilize their profits in Obamacare’s first three years. Republicans in Congress put a stop to that in 2014. So, the Administration proposes apparently illegal payments from another risk-mitigation fund, called “reinsurance.”

Obamacare’s Unintended Consequences: People Buy Short-Term Policies

woman-with-childObamacare has driven individual health insurance premiums up so high people are forgoing comprehensive coverage in favor of short-term policies:

Robin Herman, the 34-year-old owner of a marketing firm in San Francisco, bought a short-term policy in December. The monthly cost of her short-term coverage, plus conventional ACA-compliant plans for her two children, is roughly one-quarter of what she would have paid for conventional health plans covering all three of them, she says.

“This is saving me a ton of money for the year,” she said, despite the penalty. Plans that comply with the health law’s rules cost more than her old pre-ACA policy and are “just not affordable,” she said.

(Anna Wilde Mathews,” Sales of Short-Term Health Policies Surge,” Wall Street Journal, April 10, 2016.)

Sales of these policies have doubled or more since 2014, according to sources cited by Ms. Mathews. This surely feeds into the problem that Obamacare enrollees are sicker than expected: The healthy candidates are choosing these policies.

Blue Cross Blue Shield Association Confirms Obamacare Death Spiral

CAM00109The Blue Cross and Blue Shield Association, which represents 36 Blue Cross and Blue Shield plans covering 105 million Americans has released a study of its members’ claims data in Obamacare exchanges 2014 and 2015. It confirms Obamacare exchange enrollees are sicker and more expensive than enrollees in pre-Obamacare individual plans or employer-based plans:

Members who newly enrolled in BCBS individual health plans in 2014 and 2015 have higher rates of certain diseases such as hypertension, diabetes, depression, coronary artery disease, human immunodeficiency virus (HIV) and Hepatitis C than individuals who had BCBS individual coverage prior to health-care reform.

Consumers who newly enrolled in BCBS individual health plans in 2014 and 2015 received significantly more medical care, on average, than those with BCBS individual plans prior to 2014 who maintained BCBS individual health coverage into 2015, as well as those with BCBS employer-based group health insurance.

The new enrollees used more medical services across all sites of care—including inpatient admissions, outpatient visits, medical professional services, prescriptions filled and emergency room visits.

Medical costs of care for the new individual market members were, on average, 19 percent higher than employer-based group members in 2014 and 22 percent higher in 2015. For example, the average monthly medical spending per member was $559 for individual enrollees versus $457 for group members in 2015.

These health plans have not done a great job containing costs in employer-based health plans either. Those policies’ average monthly health spending increased 8 percent in the first nine months of 2015 versus 2014. However, costs in individual policies increased 12 percent, half again as much. This means the gap in medical spending between the two markets is increasing.

One Quarter of Obamacare Enrollees Dropped Out in 2015

people-in-waiting-roomThe administration recently announced 12.7 million people selected or were automatically enrolled in an Obamacare exchange plan at the end of the third open season – February 1. Except for special cases, anyone who missed that deadline cannot enroll in an Obamacare plan for 2016.

That is a few more people than the 11.7 million than at the end of 2015’s open enrollment. However, the administration also announced that only 8.8 million people remained enrolled in Obamacare on December 31, 2015. That is a drop of almost one quarter from the end of 2015 open enrollment.

Massive Fraud Likely in Obamacare Exchange Subsidies

HSAThe Government Accountability Office has just released a report detailing the massive opportunities for fraudulently getting tax credits in Obamacare’s health insurance exchanges. Obamacare sends billions of taxpayers’ dollars to health insurers which operate in these exchanges – $37 billion last year alone. These tax credits are used to discount premiums for plans offered in the exchanges.

During undercover testing, the federal Marketplace approved subsidized coverage under the act for 11 of 12 fictitious GAO phone or online applicants for 2014. The GAO applicants obtained a total of about $30,000 in annual advance premium tax credits, plus eligibility for lower costs at time of service. The fictitious enrollees maintained subsidized coverage throughout 2014, even though GAO sent fictitious documents, or no documents, to resolve application inconsistencies.

Obamacare’s Cost per Beneficiary Explodes with Shrinking Enrollment

CBOThe Congressional Budget Office’s latest budget estimate shows Obamacare’s costs per beneficiary have exploded, as enrollment in Obamacare’s broken exchanges collapses. January’s update estimates 2016 exchange enrollment at 13 million people (p. 69).  Although the Administration had previously downgraded its estimate of Obamacare enrollment, this is the first significant change by the non-partisan CBO.

What is really shocking is the January update still estimates tax credits, which subsidize insurers participating in exchanges, will cost taxpayers $56 billion this year (p. 182). That amounts to about $4,308 per enrollee (although not all are subsidized). Back in March 2010, CBO estimated that 21 million people would be covered in exchanges in 2016, for a total cost of $59 billion in tax credits (pp. 20-23). That would amount to about $2,810 per enrollee.

Who Pays Obamacare’s “Slacker Mandate”? Workers with No Kids!

LGBT-ACA-ADThe “slacker mandate” is the provision in Obamacare requiring employer-based health plans to offer benefits to adult dependents of their workers, up to age 26. I previously discussed research showing the mandate reduced work among adults, aged 19 to 26, and increased the time they spend socializing, sleeping, and exercising.

What about the financial costs of the mandate? Speak to an insurance agent or benefits consultant and they will tell you the cost are fully borne by working parents. In the old days, employer-based health insurance was offered to workers in three sizes: Single, couple, or family. It did not matter how many kids you had. Today, each dependent adds to the premium. So, the “slacker mandate” is paid for by the working parents. That is not really a problem for society. However, there is more to the story.

A remarkable study published by the National Bureau of Economic Research concludes this happened. The slacker mandate reduced wages among workers without children by $211 a month, but did not reduce wages among workers with children (either minor or adult) by a statistically significant amount.