As Election Day draws closer, Republican Donald Trump might have an ace in the hole: steep increases in health insurance premiums in some key battleground states.
For millions of Americans who do not receive taxpayer-funded subsidies under the Affordable Care Act, the health cost savings promised by President Obama never materialized. Ed Haislmaier, a senior research fellow at The Heritage Foundation, estimated that insurance premiums this year rose about 16 percent compared to the year before.
“It looks like it’s going to be a lot more going into ’17.”
“It looks like it’s going to be a lot more going into ’17,” he said, pointing to the large premium hike requests that many insurers have submitted to state insurance commissioners.
Those premium increases vary wildly across the country. A recent analysis of 17 markets by the Kaiser Family Foundation found that the cost of the second-cheapest “silver” plan on the Obamacare exchanges will increase by an average of 9 percent, compared with a 2 percent increase the previous year.
Blue Cross and Blue Shield of North Carolina said it wants to raise rates by an average of 18.8 percent, while Aetna requested an average increase of 24.5 percent. The average requested increase in Ohio is almost 10 percent, with a 39 percent requested increase in one case.
The Pennsylvania Insurance Department reported that companies requested increases averaging 23.6 percent for individual plans.
Haislmaier said insurance companies significantly underpriced their plans when the online marketplace launched in 2014. Companies underestimated the claims they would be paying because their customers, on average, are older and sicker than they expected.
“I think a lot of insurance companies didn’t know what they were getting into,” he said. “They had very little data to go on [during the first year of the exchanges]. That’s why you’re seeing a lot of insurance companies playing catch-up.”
Insurance Companies Losing Subsidies
Another reason why 2017 will be a bad year for many insurance customers is that “reinsurance subsidies” from the federal government that were designed to cushion the transition to the new law will expire next year, Haislmaier said.
[lz_table title=”Insurance Premium Increases 2013-2015″ source=”Heritage Foundation”]Family of four
A Heritage Foundation analysis of data for plans sold on the online exchanges show that the average premium for a family of four in Wisconsin was 27 percent higher in 2015 than a comparable plan the year before Obamacare took effect. The cost more than doubled for the typical 27-year-old and rose by 68 percent for the average 50-year-old. Florida premiums also increased dramatically — up by 81 percent for 50-year-olds, 88 percent for 27-year-olds, and 25 percent for families.
Michigan, Virginia, Pennsylvania, and North Carolina also experienced large increases in the categories examined by The Heritage Foundation.
The increases were particularly steep for younger adults, whose rates are higher than they otherwise would be in order to comply with Obamacare’s requirement that prices be set at no more than three times more expensive based on age, Haislmaier said.
Increases were more modest from 2014 to 2015, Haislmaier said, as insurance companies adjusted to the new market. But they have begun rising again.
Beyond surprises in the customer pool, Haislmaier noted, the Affordable Care Act placed a number of requirements on insurance companies to cover various procedures and services. In states that lightly regulated insurance companies, that led to sharp price hikes.
“They’ve done a lot of things that really made a mess of the market,” he said.
A ‘Magnet’ for the Old and Sick
Haislmaier said the law also allows people who had employer-sponsored insurance but got laid off to sign up for coverage on the exchange and, often, receive a subsidy. The people most likely to take advantage of that are folks with more health problems, he said. The law also dumped about 350,000 Americans who had been in federal and state high-risk pools into the exchange.
That, combined with the fact that the young and healthy are more likely to balk at the cost of even subsidized insurance, conspired to “turn this into a magnet for older and sicker people,” Haislmaier said.
Trump has called for repealing Obamacare, which he blames for “runaway costs, websites that don’t work, greater rationing of care, higher premiums, less competition, and fewer choices,” according to his campaign website. He has called for replacing the law with market-based solutions — although he has offered few details.
Obamacare cuts both ways as a campaign issue. Although never broadly popular among the general public, the subsidies have helped millions of people get insurance who did not previously have it. At the end of 2015, almost 7.4 million people were receiving subsidies. But more than 10.3 million people either have insurance through the exchanges without subsidies or individual insurance plans outside the exchanges.
Haislmaier said many of those customers are paying more — and in some cases substantially more — than they ever have. He added that even some of the higher-income people receiving subsidies are feeling the bite of the premium hikes because their subsidies are relatively modest.
Which group will hold more sway in November?
“There is an old saying: The squeaky wheel gets the grease,” Haislmaier said. “People are more likely to write a complaint letter than a thank-you letter.”