Yes, insurance premiums on the Affordable Care Act marketplaces are rising by 25%. Subsidies are also increasing, insulating many policy purchasers from this inflation, but we’re still paying that bill collectively.
Senator John Thune has been advising since September that Republicans can win by bashing ObamaCare and its premium increases. But what about the ACA is causing these premium increases, and how do we stanch them?
The ACA imposes two fundamental obligations: insurers have to take all customers, sick or healthy, and citizens have to buy health insurance. As Star Tribune‘s D.J. Tice explains, insurers can’t get out of the former rule, but citizens can get out of the latter.
The mandate, controversial from the start, may not be working as designed for the simple reason that its penalty is too gentle. For many people, it’s cheaper to pay the “tax” than to buy insurance — and too many young healthy folks are apparently being tempted to defy the law [D.J. Tice, “Rising Health Care Costs: A Race We’re Running Willingly?” Minneapolis Star Tribune, 2016.10.21].
Insurers are thus ending up with a sicker, costlier pool of policy buyers without the countervailing revenue of healthier policy buyers. Premiums are rising because a higher percentage of policy holders are actually using their insurance.
How do we fix that imbalance? We can do a Trump repeal and go back to the old system where insurers don’t have to sell their product to the sick people who need it most. Selling insurance only to healthy people means easy profits on low premiums, but it also means taking financial/health security away from millions of Americans. Thanks to the ACA, more Americans have health insurance than ever before. The only way repealing the ACA lowers premiums is if it results in kicking lots of sick people off the insurance rolls.
The problem with the Affordable Care Act is not that it tries to insure too many people. The problem is that it doesn’t insure enough people—i.e., it doesn’t maximize the pool of premium payers to share the burden among sick and healthy (or unlucky and lucky?) alike.
As an alternative, consider British Columbia’s single-payer plan. The Pacific province had planned to increase rates for its Medical Services Plan 4% this year but cancelled that rate hike in September. “The full premium rate for one adult will not increase and will remain at the 2016 [monthly] rate of $75.” B.C. charges no premium for anyone under age 19. B.C. fully subsidizes coverage for residents with adjusted net income (after deductions) of $24,000; subsidies scale down as income rises; folks with net adjusted income over $42,000 pay the full premium: $75 per month for an individual, $150 per month for a couple, nothing extra for kids. That’s for the Medical Services Plan—no deductible, no different levels of coverage, just one plan for everyone.
U.S. Health and Human Services is boasting that “77% of customers will be able to find plans that cost them less than $100 per month, after assistance.” But in British Columbia, under single-payer, 100% of customers get one plan that costs every one of them $75 or less.
If we just want lower premiums and don’t care who has insurance, then sure, fine, vote for Trump and Thune and Noem, repeal ObamaCare, and throw tens of millions back to being one bump or biopsy away from medical bankruptcy. If we want to lower premiums and make sure everyone has insurance, we look to British Columbia, Bernie Sanders, and single-payer.