Why the Obamacare Debate Isn’t Over

President Obama declared the national debate on the health care law “over.” The White House can prematurely celebrate its questionable 7.5 million sign-up number, but the end of the federal exchange’s open enrollment period doesn’t mean the Obamacare debate is over. Michael Gerson, in a Washington Post opinion piece, summed it up well: “The Obama administration is pausing to bow at mile two of a marathon”.

Americans are going to see and experience ongoing negative effects of the president's health care law. Democrats know this; otherwise they wouldn’t have unilaterally delayed or changed parts of the health care law more than 20 times – all without coming to Congress.

Insurance companies are already calculating premium rates for their 2015 exchange plans. Later this spring and summer, insurers will have to submit their plan bids to state and federal officials. By fall more detailed information should start to surface showing what those final plan premium rates will be. Initial indications warn that people should expect to see higher premiums and higher out-of-pocket costs next year. If costs rise dramatically, then the five million people in the individual market who don’t qualify for a taxpayer subsidy are going to be hit hardest.

During the past week alone, two independent surveys provided data showing Obamacare’s impact on health insurance premiums and large employer costs over the next decade.

Morgan Stanley Survey Shows Sharp Premium Increases. An April 7, 2014, Morgan Stanley survey of 148 insurance brokers found Americans faced the “largest acceleration in small and individual group rates in any of the 12 prior quarterly periods.” The analysis pinpointed four Obamacare insurance market changes as key factors causing these premium rate hikes:

• Commercial underwriting restrictions such as guaranteed issue;
• Age-rating bands that limit the amount premiums can vary between young, healthy people and unhealthy, older people;
• Taxes, specifically a $101.7 billion tax on health insurance companies;
• Essential health benefit mandates.

The analysis showed an average premium increase of more than 11 percent in the small group market and 12 percent in the individual market. The small group market growth rate leapt from three percent in September of 2013 to more than six percent in December 2013. Over the subsequent three-month period, premium growth rates doubled again to the current average of 12 percent.

Health Insurance Market Prices Soar

Price increases by quarter for renewing health plans

Data source: Morgan Stanley survey of insurance brokers

In the individual market, the same analysis calculated a two percent growth rate in September 2013; but by December, that number had spiked to nine percent. Over the subsequent three-month period, premium growth rates rose again to the current average of 11 percent. The Morgan Stanley survey results prove that Obamacare’s insurance market changes drive health care premiums up – and in some cases by substantial amounts. Ten states seeing the most extreme average individual market rate increases in 2014 are:

• Delaware – 100 percent
• New Hampshire – 90 percent
• Indiana – 54 percent
• California – 53 percent
• Connecticut – 45 percent
• Michigan – 36 percent
• Florida – 37 percent
• Georgia – 29 percent
• Kentucky – 29 percent
• Pennsylvania – 28 percent

Obamacare Hits Large Employers. Even people who get health insurance through a large employer are going to face higher costs. An April 2014 survey of companies with 10,000 or more workers estimated the health care law’s impact on their business over the next decade.

• Per-employee cost impact estimated between $4,800 and $5,900;
• Per-employer overall business cost increases between $163 million and $200 million – an 8.4 percent increase in 2023 beyond what business would have spent without the health care law;
• Total Obamacare cost impact on all large U.S. employers over the next 10 years estimated at $151 billion to $186 billion.

In response to this report, the White House claimed: “Since the [law] passed, health care cost growth has slowed to the lowest level on record.” 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. If this trend continues, consumers can expect to see even higher costs.

Democrats promised their health care law would “lower premiums for the average family by $2,500.” The data prove otherwise. Rather than admit the law doesn’t work, Democrats stubbornly continue to implement a health care law that threatens the economy, increases costs, and limits job growth.

Health Care Headlines

Wall Street Journal: Opinion: “The ObamaCare Debate Is Far from Over” President Obama went so far as to declare, “The debate over repealing this law is over. The Affordable Care Act is here to stay.” That’s a wish, not a fact. ObamaCare is and will remain a political problem for Democrats because there’s a huge disconnect between the party’s rhetoric and the reality that people affected by the law have experienced.

Bloomberg Buisnessweek: “Obamacare Adds 400,000 After Deadline, Sebelius Reports” While the official enrollment period ended March 31, the Obama administration said that people who tried to sign up before the deadline would have until April 15 to complete their applications. The late enrollees bring the total number to 7.5 million in private health plans, Kathleen Sebelius, the secretary of the Department of Health and Human Services said at a Senate hearing today.

Forbes: “RAND Comes Clean: Obamacare’s Exchanges Enrolled Only 1.4 Million Previously Uninsured Individuals” RAND published a report yesterday indicating that Obamacare’s exchanges only enrolled 1.4 million previously uninsured people.

Kaiser Health News: “Early Drug Claims Suggest Exchange Plan Enrollees Are Sicker Than Average” Offering a first glimpse of the health care needs of Americans who bought coverage through federal and state marketplaces, an analysis of the first two months of claims data shows the new enrollees are more likely to use expensive specialty drugs to treat conditions like HIV/AIDS and hepatitis C than those with job-based insurance.

Modern Healthcare: “Insurers will still see Medicare Advantage cuts on the horizon” Insurers and Wall Street analysts still see cuts ahead for Medicare Advantage plans even though the Obama administration says that tweaks to its draft policy mean the rates will rise.