Nationwide, news that rates for the benchmark ObamaCare “silver” plan will rise an average of 25 percent next year — in Georgia, it’s more like 15 percent, and 13 percent in metro Atlanta — have once again inspired conservative claims that the program’s long-predicted demise is finally upon us.
QUESTION ONE: Is that true?
No. Once again, that isn’t close to being true. The increase in rates for 2017 represents the market correcting itself, as necessary, and for the vast majority of people buying insurance through the federal marketplace, the financial impact will be minimal. In Georgia, for example, 89.4 percent of those buying individual coverage through the marketplace are eligible for federal subsidies that will offset the rate hike.
That means that in the Atlanta market, a 40-year-old nonsmoker making $30,000 a year would see a monthly rate decrease of $1 after subsidies in 2017, according to data compiled by the Kaiser Family Foundation.
QUESTION TWO: “So ObamaCare isn’t a failure?”
Hardly. Again, let’s use Georgia as an example. By the end of 2015, we had almost 900,000 more working-age Georgians with health insurance than when ObamaCare was enacted back in 2010, according to Census Bureau and Department of Health and Human Services statistics. (While a fraction of that growth is from population increase, the vast majority is due to ObamaCare). The number of additional insured would be closer to 1.5 million if Georgia had accepted federal funding for Medicaid expansion instead of grandstanding on its ideological opposition, a goal that state leaders are now awkwardly lurching toward.
Providing health insurance for that many people, within or even below projected costs, with no adverse impact on the deficit according to the GOP-run Congressional Budget Office, is not a failure. It faces challenges, but overall it is working as intended.
QUESTION THREE: “OK, but doesn’t a rate increase of this magnitude mean that costs are spiraling out of control, with huge unexpected costs to the federal government?”
Again, no. As both private and government health-care experts point out, ObamaCare rates in the first few years of the program came in considerably below initial projections by the Congressional Budget Office, and annual rate hikes were also well below longtime historic trends. (People forget that annual rate hikes of 25 to 30 percent drove passage of ObamaCare in the first place.) In the early years of ObamaCare, insurance companies competing for business set their rates too low for the costs that they would incur, and they are now correcting for it. The rate hikes announced this year — while large in some instances — bring rates back to the level that experts had predicted from the beginning.
QUESTION FOUR: “So the program is fine, then? No need to worry?”
No, it needs some work. Any program of this complexity and importance is going to require legislative adjustments over time. It was true of Social Security, Medicare, Medicare Part D and Medicaid, and it is true of the Affordable Care Act as well. We have now gone six years since the Affordable Care Act was signed into law, and we’re getting a better idea of what those adjustments should be.
The biggest problem is that to date, ObamaCare has not drawn as many healthier, younger people into the insurance pool as expected. So some relatively simple fixes are needed:
- We have to make it harder for people to pick up insurance when they need it and drop it when they don’t. I know people who have gamed the system that way, and you probably do too. And while I’m personally glad that they got the care they needed, a system generous enough to allow that isn’t going to be financially sustainable. The Obama administration has tightened up some of that, but legislative changes would be useful in doing more.
- The income tax penalty for going without health insurance has to be toughened, both to account for the cost to taxpayers of treating the uninsured when they do need care and to alter their financial calculations about whether to get insurance. The whole idea behind insurance is that you pay into it when you’re healthy so it’s there for you when you’re not.
- In addition to a bigger stick in the form of a tax penalty, we need a somewhat larger carrot in the form of subsidies for younger people to make coverage more attractive. The more healthy people people we can draw into the pool, the lower the per-person cost.
- We have to do something about soaring pharmaceutical costs, as the pricing scandals involving the EpiPen, Daraprim and other drugs illustrate. It’s ridiculous that Americans often have to pay several times as much for the same drug as people in Europe and Asia, particularly when those drugs were developed in part through research funded by U.S. taxpayers.
- In some rural areas without much competition among health-care providers or insurance companies, the cost of an insurance policy is skyrocketing, leaving those who don’t qualify for subsidies facing unaffordable rates. That problem also has to be addressed.
QUESTION FIVE: “Do you really believe Congress is going to enact the changes needed?”
Unfortunately, no. We’ll see how the election plays out and how the Republicans handle their internal divisions, but the GOP’s strategy of refusing to help govern unless they get to call all the shots will probably continue to play out in ObamaCare as well. They would far prefer to see the program struggle than to see it improve, even if their own constituents suffer as a result.
For example, rates are rising in 2017 in part because in 2014, Republicans succeeded in killing a provision of the Affordable Care Act that helped to compensate insurance companies if they end up with a disproportionate number of extremely sick, expensive customers. At the time, Sen. Marco Rubio and others celebrated that as a big political success, because they knew what the consequences would be higher rates.
QUESTION SIX: “So if Republicans refuse to allow adjustments to ObamaCare, we’ll at least finally see the GOP’s long-promised plan to replace it with something better, right?”
You are so funny.
Republicans have a “plan” to replace ObamaCare in much the same way that Donald Trump has a “plan” to defeat ISIS. It amounts to flowery promises of “empowering patients” and “slashing costs,” with no level of detail of how much it would cost, how it would work, what impact it would have or how many Americans it would leave uninsured.
As you know, House Republicans alone have voted more than 60 times to repeal ObamaCare, with not so much as a subcommittee vote on a replacement bill. Why? Because House Speaker Paul Ryan has a dirty little secret that he would prefer to keep hidden as long as possible. He knows, based on previous failures, that any replacement plan that he would bring to the House floor would get voted down by his own Republican colleagues, many of whom are flatly opposed to any federal role whatsoever in the health-insurance market.
The entire GOP health-insurance strategy — all their rhetoric and legislative posturing over the past six years — has been an elaborate attempt to hide that basic, fundamental reality from the American public. Their true alternative to ObamaCare is, well, nothing.
QUESTION SEVEN: “So you’re saying we’re screwed?”
Well, I wouldn’t put it that way, but kinda, yes. ObamaCare isn’t going to be repealed, in part because doing so would strip insurance from more than 700,000 people in Georgia alone. It isn’t going to be replaced, because any plan ambitious enough to have an impact on the problem will be too ambitious for House Republicans to accept. And our broken political system won’t enact the basic adjustments that simple logic tells you would be required in a new program after a few years of operation.
Things will have to get worse before they have a chance to get better.