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Obamacare’s Looming 2015 Rate Hikes

June 3, 2014

Insurers are currently engaged in the process of setting their 2015 Obamacare premiums and states have begun releasing proposed rates. As The Hill reported on May 22, “news about Obamacare premiums will hit nearly every week this summer … guarantee[ing] a drumbeat of news about rate hikes all the way to the November midterm elections.”

Expected release date for preliminary 2015 premium rates

Expected release date for preliminary 2015 premium rates

Source: Media reports

Empty Promises

When Washington Democrats were trying to win elections and push their health care plan into law, they repeatedly said their bill would drive down premiums and health care costs.

“If you’ve got health insurance, we’re going to work with you to lower your premiums by $2,500 per family per year. And we will not wait 20 years from now to do it or 10 years from now to do it. We will do it by the end of my first term as President of the United States of America.”

 -- Barack Obama, February 27, 2008

In 2009, President Obama repeated his promise: “Coupled with comprehensive reform … that could save families $2,500 in the coming years – $2,500 per family.” While the health care battle raged in Congress, Republicans countered the President’s claims using independent, factual analysis. Non-partisan experts had produced overwhelming evidence that the health care law would, in fact, force premium rates up.

Washington Democrats ignored the warnings. At a February 2010 White House health care summit, President Obama denied premiums would go up, saying, “that’s just not the case.”

How Many Premium Impact Studies Does It Take?

In December 2012, health insurance company CEOs predicted consumers would face higher premiums as the health care law’s insurance market reforms take effect. Dozens of separate studies confirmed the health care law would cause health insurance premium rates to rise.

On April 14, CBO forecast that “premiums are projected to increase by about 6 percent per year, on average, from 2016 to 2024.” While this figure might be lower than CBO had previously estimated in November 2009, smaller cost increases do not mean Americans will see their health insurance premiums fall, despite Democrats’ promises to lower premiums by $2,500.

Real World Data, Not Just Predictions

As proposed 2015 state rate filings become public, policy experts will be able to move beyond academic predictions and see what is actually happening.

Virginia: In early May 2014 Virginia was one of the first states to disclose its proposed 2015 health insurance plan rates. Premium increases ranged from 0.5 to 16.6 percent.

Washington: Also in May 2014, the state of Washington released its proposed 2015 rates. One insurer, Molina Healthcare of Washington, submitted a premium decrease of 6.8 percent. The vast majority of insurers requested 2015 rate increases ranging from 0.57 to 14.2 percent.

Ohio: On May 30, the Ohio Department of Insurance announced that the average proposed individual market health insurance premium in 2015 will be 13 percent higher. In the small group market, the average premium is expected to go up 11 percent. According to Ohio insurance regulators: “It’s bad news … but it’s what we expected and it’s what the research we did in advance predicted would happen. Continued and unnecessary headwinds out of Washington are making it more difficult for job creators, hard-working Ohioans and their families to purchase health insurance.”

Democrats’ Spin Doesn’t Hold Up to Scrutiny

Don’t Worry, It’s Not That Bad of a Rate Hike: Secretary of Health and Human Services Kathleen Sebelius already conceded that “premiums are likely to go up” next year. Desperate to spin the story, Sebelius argued that the American people shouldn’t worry because premiums will “go up at a slower pace.” Democrats on the House Energy and Commerce Committee clearly read from the same White House talking points. They released a memo defending the projected rate hikes in Virginia and Washington state as moderate, saying they “will be well below average insurance premium increases observed in the years prior to passage of the ACA.” They can’t hide from the fact that they promised families would see their health insurance premiums drop.

Trust Us, Obamacare Really Is Slowing Health Cost Growth: Democrats contend that Obamacare caused national health care spending to slow. This is false. On April 1, the Bureau of Economic Analysis reported that during the last quarter, health care spending rose at its fastest pace in 10 years. CBO’s updated projections caution that rising annual health insurance expenditures, per person, will be the key metric driving premium costs over the next decade. The Obama administration’s own Medicare actuaries said in September 2013 that the past slowdown in health care spending was due to the weak economy.

Cost Doesn’t Matter Because of Subsidies: When confronted with overwhelming data that the health care law will increase premiums, Washington Democrats routinely argue Americans shouldn’t worry because some people will get a subsidy to cover the law’s premium hikes. Subsidies may help some families pay for more expensive, government-mandated coverage; but most people won’t get them, and subsidies do nothing to lower the actual cost of health insurance. The federal government will spend trillions to hide the premium hikes, but whether it is the customer or the taxpayer footing the bill, the underlying premiums are still going up.

For those who are eligible for a subsidy, the amount falls rapidly as incomes rise. Due to the way the subsidies are indexed, CBO projects that over time “the shares of the premiums that the subsidies cover will decline.” CBO also found that people with incomes between 250 and 300 percent of the federal poverty level would only receive subsidies sufficient to cover 42 percent of the second-lowest cost “silver” plan. Those with incomes between 350-400 percent of FPL get subsidies sufficient to cover just 13 percent of the premium. Democrats don’t want consumers to know most of them won’t actually qualify for help; they will just be stuck with higher health insurance premiums.

Independent experts predicted that one of the side effects of the Democrats’ health care law would be higher premiums. As states begin to reveal the rates for next year, American families and taxpayers will be left to pay for the Democrats’ costly failure.