Governor Wolf announced exchange insurance premiums will increase by 30 percent next year thanks to President Trump and Congress. The problem is insurance rates have increased every year under the Obamacare exchanges, long before President Trump was elected. Here are three reasons health insurance premiums are rising at a bewildering rate:
- The 2018 rates approved by the Insurance Commission were higher than the rate increases insurance companies requested. Guess what—the Insurance Commission did the same thing in 2017, approving a 32.5 percent average increase, when insurance companies requested smaller increases, on top of a 16 percent increase in 2016.
- Between 2013 and 2017, individual monthly premiums increased a whopping 120 percent in Pennsylvania! For many individuals and families, the cost spikes have been even more astronomical. A Philadelphia family of four with a basic plan in 2013 is shouldering a 362 percent increase. Basic plans for a 27-year-old in Pittsburgh have tripled in four years. At the core of these price hikes are Obamacare's mandates to provide insurance with few adjustments for age or health status. That means individuals can wait until they get sick to purchase insurance, raising rates for everyone else.
- Legal battles over cost sharing reduction subsidies (subsidies to off-set insurance company losses) are reducing competition as nervous insurers leave the exchange. About one third of counties have only one exchange provider. Insurance companies, which are losing money in the exchange, are expecting this bailout despite a federal court ruling that President Obama’s decision to issue these bailouts was illegal. President Trump is actually enforcing Obamacare as written by ending these illegal subsidies.
It’s less clear what effect the president’s executive order to allow association plans, health care reimbursement arrangements (HRAs) and short-term plans will have on Pennsylvanians. Michael Cannon over at Cato writes;
If the Trump administration allows insurers to offer guaranteed renewable short-term plans, it would be truly revolutionary. Consumers could avoid Obamacare’s hidden taxes and low-quality coverage by purchasing relatively secure insurance. . . In effect, the Trump administration could enact Sen. Ted Cruz’s (R-TX) compromise repeal-and-replace proposal via regulation.
While President Trump’s recent actions could help mitigate the pain, these changes should be initiated by legislation versus with “the pen.” The overt lawlessness surrounding implementation of the Obamacare over the past seven years is no excuse.
More broadly, until Gov. Wolf and Congressional leaders realize that the mandates, federal control, taxpayer subsidies and dozens of taxes imposed in Obamacare make health care less affordable, we can’t begin to address the underlying problem. Instead of the heavy hand of Obamacare, we need to adopt reforms to put patients in charge, offer choice in coverage, focus on quality health care rather than coverage, and reform Medicaid.