The individual market is already in a “death spiral.” In the death spiral scenario, insurers are forced to raise premiums to cover a sicker than expected pool of customers, pricing out all but the sickest customers, leaving insurers with an even sicker pool and forcing premiums yet higher again. And so on.
Many health care policy experts have warned that repeal without a replacement -- even with a delay -- could cause that kind of collapse of the individual market, because it would eliminate the individual mandate and send healthy customers to the exits. But Republicans have insisted that a death spiral is already happening.
Experts say that's not true.
Yes, there was a significant premium jump in the 2017 in many places, and in some areas, insurers pulled out entirely. Yet, as Urban Institute health policy fellow Linda Blumberg pointed out in an email to TPM, there are also places, particularly urban areas, where the individual market has seen only modest increases in premiums, or even decreases in 2017 plan year.
Forecasts are suggesting that the premium hikes were a one-time anomaly, as plans catch up with what turned out to be under-priced rates when Obamacare was initially implemented.
“Although most insurers will still report an underwriting loss for 2016, the losses will be smaller than in 2015. This means the changes made to network design and premium pricing are gaining traction, though more still needs to be done,” a report by S&P Global said late last year. “For 2017, we expect continued improvement, with more insurers reporting close to break-even or better results for this segment."
The latest piece of evidence that the “death spiral” routine is overblown is that Obamacare enrollment for the 2017 plan year has hit record highs, the Department of Health and Human Services announced last month.
Obamacare plan premiums have “skyrocketed” The jump in Obamacare premiums last year ranged as high as 116% in Arizona, as President-elect Donald Trump noted on Twitter, to decreases in places like Providence, Indianapolis, and Cleveland, according to Kaiser Family analysis last fall. The average increase for the federal HealthCare.Gov marketplaces was 25 percent, according to the HHS, and 22 percent on state-based exchanges where the data was available. But for vast majority of Obamacare enrollees -- 83 percent in the 2016 plan year -- those hikes were cushioned by the subsidies offered to low- and middle-income people on the exchanges.
Furthermore, an Urban Institute study last year found that the average individual plan is actually cheaper than employer-based plans.
That being said, there are real adverse selection problems in some individual markets, in part due to the “ very small eligible population, low enrollment rates, and being a high cost area to begin with,” according to Blumberg.
“There are a small number of markets that have gotten extremely high, such as Arizona, but we have policy strategies to address this,” she said.
Additionally, those problems existed in rural areas before the Affordable Care Act was passed. And without a consensus Republican replacement plan, it’s hard to say how they would be dealt with after Obamacare was repealed.
Premium rises for families have been “extraordinary.” The factoid that premiums for American families have jumped by $5,000 over the last five years has been said repeatedly by Vice President-elect Mike Pence and other Republicans touting the plan to repeal Obamacare without a replacement. But the talking point ignores two things. First, those numbers are for employer-based plans, not the individual plans that Obamacare is chiefly concerned with. Second, the rate at which premiums have increased for employer-based plans is actually down from the years preceding the Affordable Care Act.
Health care premiums for family plans increased by an average 31 percent over the five year period between 2006 and 2011, according to the Kaiser Family Foundation, compared to the 20 percent increase seen between 2011 and 2016.
That trend, however, has come with a "rapid rise" in deductibles, fueled by a shift towards high-deductible plans, Kaiser noted.
Obamacare is causing Medicare to “go broke” This claim, invoked by Speaker Paul Ryan to explain his desire to privatize the popular seniors’ program, is at odds with the fact that the Affordable Care Act actually extended the solvency of the Medicare program, rather than undermined it.
As the The Medicare trustees wrote in 2010: "[T]he financial status of the Hospital Insurance trust fund is substantially improved by the lower expenditures and additional tax revenues instituted by the Affordable Care Act. These changes are estimated to postpone the exhaustion of HI trust fund assets from 2017 under the prior law to 2029."
The trustees pushed that projection back even farther, to 2033, in a 2014 assessment.