Benjamin Franklin famously wrote, in a letter to friend concerning the viability of the Constitution, “In this world nothing can be said to be certain, except death and taxes.” Had he lived to witness the advent of the perversely titled Affordable Care Act, he probably would have added “Obamacare premium hikes” to his list of life’s certainties. According to a study released yesterday by the Kaiser Family Foundation (KFF), the 2017 increase for the “most common plan choices” made by individuals buying coverage through Obamacare exchanges will average about 10 percent. The 2016 increase for these plans was 5 percent.
KFF is a studiously non-partisan organization with no ideological ax to grind. Indeed, the authors of its studies usually go out of their way to give Obamacare the benefit of the doubt whenever possible. Consequently, when the usual suspects attempt to downplay this study or claim that the premium spikes are all about corporate greed, they should be written off as the partisan hacks they are. KFF looked at rate request data from major metropolitan areas in 13 states as well as the District of Columbia. And, as the word “average” implies, a significant number of the premium increases will exceed 10 percent, ranging as high as 26 percent.
In the 14 cities whose data KFF used, Obamacare enrollees living in 10 are likely to experience large premium increases on top of this year’s already-substantial hikes. And the unfortunates who live in 6 of those 10 will endure double-digit increases. Those big spikes will occur in Portland, OR (26%), Washington, DC (21%), New York City, NY (16%), Hartford, CT (13%), Richmond, VA (12%), and Baltimore, MD (10%). Even in Denver, where individuals will enjoy a lower increase than in 2016, enrollees will be hit with a double-digit spike. Their 14 percent increase is “lower” only when compared to this year’s 29 percent hike.
The White House has responded to the rate requests by implying that the insurers are up to no good and that state regulators should force them to “justify” the increases. The Hill reports, “The federal health department announced Wednesday that it will dole out about $22 million to boost state-level ‘rate reviews,’ considered one of the strongest weapons against premium increases.” The White House wants the states to impose price controls and promises to fund this interference in the insurance market with new federal grants. Meanwhile, the Obama administration has ignored congressional subpoenas involving other dubious Obamacare grants.
It goes without saying, of course, that most of the “news” media are misrepresenting this study. CNN Money ran the story under the tendentious headline, “Insurers want to hike Obamacare premiums 10% for 2017,” implying that their CEOs simply want to line their pockets with the hard-earned cash of enrollees. From the fringes of the loony left, the editors of Mother Jones introduced the KFF study thus: “As Always, Take Obamacare Premium Hike Stories With a Big Grain of Salt.” Surprisingly, one of the few honest headlines concerning the Kaiser study came from the New York Times: “Yes, Obamacare Premiums Are Going Up.”
Of course the premiums are going up. Every economist worthy of the name (this does not include Paul Krugman or Jonathan Gruber) predicted that Obamacare’s perverse incentives would distort the market such that any insurer selling coverage through the exchanges would lose money unless they charged exorbitant premiums and even more outrageous deductibles. Many healthy individuals who earn more than $47,520 annually, and are thus ineligible for government subsidies, simply refuse to buy coverage. Consequently, the insurers are stuck with patients who are sicker, on average, than would be the case in an unfettered market.
If state insurance regulators accede to the wishes of the White House and decline to approve the premium increases requested by the shrinking number of insurers willing to sell coverage through the Obamacare exchanges, there will be more cases like United Healthcare. These health insurance companies are in business to make money. And, if they are not permitted to charge enough to stay in the black, they will simply bail. This is an economic fact of life that was ignored by the authors of the “reform” law and is still being ignored by the Obama administration. But, as John Adams famously put it, “Facts are stubborn things.”
The only surprise in this premium study by the Kaiser Family Foundation is that anyone was surprised by its findings. The problem isn’t corporate greed or administrative costs or inadequate regulatory oversight or any of the other excuses offered by Obamacare apologists. The problem is the law itself. It was a bad idea, implemented poorly. As long as Obamacare remains on the books, it will drive premiums up. There is only one way to fix it — deep six it.
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