It would be too much to say Tuesday’s presidential election is only a referendum on the 2010 Patient Protection and Affordable Care Act. Sure, Clinton toes the blue line on Obamacare and Trump opposes it. But it’s not clear either candidate understands the real issues involved.
The immediate problem is that Obamacare is running a high fever. Premiums for the plans offered by state health exchanges are rising, sharply in many places. The number of insurers offering such plans is falling.
As detailed in the Wall Street Journal on Nov. 1, in every Arizona county but one, there will be just a single insurer offering public coverage in 2017. Nationally, matters aren’t quite as bad, but the trend is clear.
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Where 85 percent of U.S. counties offer three or more public exchange insurers this year, only 57 percent will have that many choices in 2017, according to the Kaiser Family Foundation. And while just 2 percent of U.S. counties offered a single insurer this year, 21 percent of counties will have just one choice next year.
Along with less competition, many consumers will see significant increases in premiums as insurers try to make up for heavy losses produced by rising enrollments that have been skewed toward sicker and more costly patients.
As a benchmark, the KFF report uses the cost of the second-lowest or “silver” plan available on a state exchange, priced for a 40-year-old male non-smoker making $30,000 annually.
Such a person living in Arizona can expect to see a 145 percent increase in their premium, from $207 to $507 monthly. Subsidies will keep that consumer’s out-of-pocket payments at $207, but the other $300 has to come from somewhere. That somewhere is the taxpayers.
[Editor’s note: Arizona, to be fair, is an extreme outlier. Check out this chart.]
Massachusetts consumers are more fortunate. On average, a similar plan here will cost $3 less in 2017. Our state has had 10 insurers writing policies on public exchanges in each of the last three years.
But Obamacare as a whole is in trouble, and will only get worse without new thinking.
It did not have to be this way. For starters, no president or party should want to win a major policy battle by just seven votes, with not a single vote from the other side of the aisle. By putting winning a partisan fight over building a broad coalition for reform, Obama ensured that Americans got a law extending coverage, but one that does so at enormous cost and with a sharp increase in political division.
Now, after six years, major court rulings, and mountains of regulations, it isn’t clear whether or how Obamacare can be saved or reformed. It is unlikely to respond to the usual political nostrums we apply to insurance markets for one simple reason: Obamacare isn’t really insurance at all, but prepaid health care.
Supporters touted the law for requiring insurers to charge the same rates, regardless of gender or pre-existing conditions. But when companies cannot price insurance products based on the most obvious risk factors, they must set premiums higher to compensate for the uncertainties injected into the market.
Obamacare did more than that. By mandating that all must have insurance, and dictating the minimum coverages that plans must offer, it forced many consumers out of the plans they had, some of which, while only adequate, were at least affordable.
Finally, by setting the penalty for not having insurance much lower than the premiums, the law left millions of young, healthy Americans with little or no incentive to buy insurance. After all, they could simply sign up if and when they fell ill. Meanwhile, by opting out, they have deprived the exchanges of the revenue officials were banking on to cover older, sicker enrollees.
Yet Clinton’s prescription is simply more subsidies for plans people can’t afford now, along with more mandates on insurers. That won’t change much. Trump says he would repeal some or all of the law, change tax rules, bolster Health Savings Accounts, and allow insurers to sell across state lines. Repeal is probably a nonstarter given the political divisions in Washington. Some of the other ideas might help curb costs and bolster choice, but it’s hardly clear Trump would have the support to achieve them.
More importantly, the next president must understand that Obamacare has shifted the basic nature of public health insurance in America toward prepaid care.
We need new thinking about the nature of healthcare insurance and political middle ground if we are to cover the nation’s medical expenses. Without both, Obamacare — and consumers — are in for a long and expensive four years.