This is what the start of a death spiral looks like.
In Vermont, one of its marketplace insurers requested an average 7.5 percent increase, and the other a 10.9 percent average annual rate increase.
In Maryland, insurers have also proposed double-digit increases. There, price hikes average 30 percent, with one plan penciling in an astonishing 91.4 percent jump.
Again, these numbers are preliminary; further negotiations with state regulators lie ahead and could materially reduce what premiums will look like in 2019. That is especially true in Maryland, where the governor and state legislators are feverishly working to stabilize the market through a “ reinsurance fund,” which would require a waiver from the federal government.
Even so, the numbers are troubling. And they’re a preview of what we should expect nationwide, as more states announce premiums over the next few months.
It is not hard to see why prices might spike. Thanks to Republican efforts to sabotage Obamacare, the pool of individual- market enrollees is getting smaller and sicker — and, as a result, much more expensive.
A formal Obamacare repeal famously bombed last year, of course. Americans stormed town halls and jammed lawmakers’ phone lines in the name of saving the Affordable Care Act. The once-toxic law received a bump in popularity, and surpassed 50 percent favorability for the first time since passage in 2010.
After many unsuccessful attempts at legislative “repeal and replace,” Republicans gave up and moved on. Or so it seemed.
Behind the scenes, they quietly continued their demolition project.
Perhaps most significant, the GOP tax law passed in December repealed the individual mandate. This freed healthy people to drop their insurance plans without penalty. The Congressional Budget Office has projected that eliminating the mandate alone will increase individual-market premiums by about 10 percent in most years over the next decade, relative to prices with the mandate in place.
Meanwhile, the Trump administration has been working to make it easier for people to buy insurance that doesn’t comply with Obamacare’s consumer protections, such as required coverage of prescription drugs and mental-health care, or no bar to people with preexisting conditions. The administration has done this by pushing ahead with rules to expand the availability of short-term health insurance plans and association health plans. Both types of plans can offer cheap but bare-bones coverage — often, essentially, junk insurance, which consumers don’t realize is junk until their claims get denied.
Additionally, Trump officials made it harder in general for people to enroll in Obamacare-compliant plans, for example, by shortening the open enrollment period this past fall, and reducing outreach and advertising.
Meaning that only people already super-motivated to purchase non-junk insurance ended up enrolling.
The net effect of all these changes: Younger, healthier and cheaper enrollees are getting siphoned out of the Obamacare marketplace. Older, sicker and more expensive people are sticking around, because they actually need coverage.
This pool of remaining enrollees raises average costs for insurers, who then raise premiums, which drives out additional relatively healthy people, which pushes premiums up further. And so on.
Or, as Maryland’s insurance commissioner, Alfred W. Redmer Jr., put it in a call with reporters: “I believe we’ve been in a death spiral for a year or two.”
Maryland has already seen its marketplace numbers plummet. In March 2017, 243,000 people enrolled in individual plans, Redmer said; a year later, enrollment has fallen to about 211,000.
The share of Americans overall who have health insurance of any kind has also been falling since President Trump took office — and is expected to fall further, thanks not only to individual-market sabotage but also some states’ new restrictions on Medicaid eligibility.
What’s especially depressing about these trends is that, before Republicans started monkeying with things, it looked as though the individual marketplaces were stabilizing.
“With insurers now mostly profitable in the ACA individual insurance market, I would have expected single-digit premium increases for 2019 reflecting health-cost growth,” says Larry Levitt, senior vice president for health reform at the Kaiser Family Foundation. “With repeal of the individual mandate and expansion of short-term plans, double-digit hikes are now likely.”
Such blatant public-policy malpractice should come with consequences. But what all this means for the coming midterm elections remains an open question. As a share of the total insurance market, the individual markets are small. Most exchange enrollees will be shielded from premium increases thanks to income-based subsidies, and despite Democratic fever dreams, voters don’t seem all that motivated by health care.
Still, it couldn’t hurt Republicans to actually try to get this stuff right.
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