In what could be one of the greatest – if not the greatest – political irony in recent memory, new data on Obamacare plan premiums released this week by the Department of Health and Human Services revealed that ObamaCare premiums will decline by an average of 1.5% next year, marking the first year-over-year decline in the program’s history. While lower health-care costs should be a boon for for not just the working class, but also those unreasonably wealthy Americans earning $50,000 a year or more who don’t have access to subsidies under the program, the simple fact that Republicans are doing a better job managing ObamaCare than Democrats did could create an intractable political problem for Dems running in swing states, who will now be left with the difficult task of explaining exactly how and why the Trump administration – which they have blamed for doing everything in its power to gut the program – is actually doing a better job of running ObamaCare than the Democrats did.
According to the Wall Street Journal, the decreases apply to the second-cheapest plans in the “silver” tier, a middle-cost option that’s typically used as a benchmark for the entire program, and follow years of double-digit increases. The average rate of these plans increased 37% between 2017 and 2018. To be sure, premium costs can vary widely from state to state, with some still seeing significant hikes.
And under President Obama, O-Care premiums rose 117%.
The decline in the average premium for these silver tier plans took many health-care industry analysts by surprise. According to WSJ, few insiders managed to anticipate that robust economic growth would help draw individuals back into the health care exchanges and provide an incentive for insurers to continue to offer these plans (after UnitedHealth pulled out of a majority of the exchanges a few years ago) even after Republicans killed the individual mandate with their tax bill.
The shift in premiums reflects increasing stability in the marketplaces heading into their sixth year, as insurers have seen a financial turnaround that is delivering profits on ACA plans after repeated losses. The improved financial results are closely tied to previous sharp rate increases, which brought premiums in line with insurers’ costs, as well as a more consistent, predictable group of enrollees as the markets mature.
Still, the news is a surprise. Many health analysts had predicted significant price increases next year because of the actions taken by the administration and the GOP Congress, especially an end to the penalty for not having insurance and the bolstering of non-ACA-compliant plans.
Contrary to the conventional wisdom, the repeal of the individual mandate is actually having a negligible impact on premiums.
“The market has actually become a real insurance platform that has completely stabilized,” said Steve Ringel, president of the Ohio market for CareSource, a nonprofit insurer that offers ACA plans in four states. CareSource will implement rate increases for 2019 that are smaller than those it had this year, he said.
Which is why Democratic complaints that the administration has tried to sabotage the law have been proven to be completely unjustified.
“There have been all these allegations that the administration has tried to sabotage Obamacare,” Seema Verma, administrator for the Centers for Medicare and Medicaid Services, said in an interview. Instead, she said, the premium drop shows “we’re trying to do a lot of things to stabilize” the market.
Thanks to the Trump administration’s efforts, some states – Tennessee, for example – will see premiums drop by more than 25%.
Average premiums for the plans will depend on location. Tennessee, for example, will see the average premium for the midprice silver benchmark plans drop 26% to $449 in 2019 from $608 in 2018, based on CMS data for a 27-year-old consumer. Others will see an uptick. In Delaware, CMS showed a 16% increase, and there will also be double-digit increases in North Dakota and Hawaii.
Of course, this won’t stop some Democrats from trying to make the case that premiums are declining in spite of Trump’s policies, not because of them.
Democrats had been counting on higher rate hikes to spur voter turnout in their favor. Instead, they’re likely to argue that rates would have dropped even more if Republicans hadn’t taken actions like repealing the ACA’s penalty for not having insurance. They also blame Trump administration actions, such as allowing the increased sale of short-term plans that don’t comply with the ACA.
“If not for repeal of the individual mandate penalty and expansion of loosely regulated short-term plans, premiums would be even lower next year,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation.
If premium decline again in 2020, or at least rise by a negligible amount, this could become a major problem for Democrats, who may now resort to trying to undermine the signature achievement of the erstwhile leader of their party to help bolster their political narrative in time for Trump’s reelection campaign in 2020.