WASHINGTON - On Friday, White House Press Secretary Sean Spicer joined a host of Trump administration officials and GOP lawmakers to claim that “the current Obamacare system will collapse on its own."
Their argument goes that insurers are leaving the individual market leading to a lack of competition and choice for consumers. They cite premium hikes in 2017 as proof that marketplace coverage has become unaffordable as deductibles and co-pays increase.
The logical conclusion – an insurance industry “death spiral” when people begin to drop their individual coverage because they can’t afford it, leaving behind mostly sicker plan members whose higher medical costs then drive up premiums even more.
Insurers, left with fewer and more costly plan members, would ultimately stop offering coverage altogether, which increases the numbers of uninsured.
It’s a great story line. It’s just not happening, experts say.
However, provisions in the GOP legislation to repeal and replace Obamacare could, in fact, cause insurance markets to unravel in certain areas of the country, according to an analysis by Jeanne Lambrew and Ellen Montz of The Century Foundation, a progressive think tank.
That’s because the Republican bill repeals the Affordable Care Act’s individual mandate and doesn’t use income and cost of coverage to determine the amount of premium of tax credits that people get to help pay for coverage.
Premiums in states that use the federal healthcare.gov marketplace did increase an average of 25 percent in 2017, after rising just two percent in 2015 and 7.5 percent in 2016.
But that was mainly because insurers had underpriced their coverage in 2015 and 2016 because they didn’t know what the mix of young, old, healthy and unhealthy plan members would look like - or how much they would cost.
After making the cost corrections in 2017, most analysts felt the individual market was on its way to stabilizing in 2018.
“The high premium increases experienced in many states in 2017 do not necessarily indicate that a premium spiral is occurring. Rather, those increases could reflect a one-time adjustment to insurer assumptions based on their actual experience in the ACA market,” said a statement from Cori Uccello, senior health fellow at the American Academy of Actuaries.
Even with the higher rates this year, 72 percent of marketplace enrollees can get coverage for $75 or less per month after applying tax credits, the federal government reports. And 77 percent can find a plan for $100 or less.
And while competition and choice are lacking in some markets across the country, on average marketplace consumers have 30 plans to choose from, the federal government reports.