What's being lost in noise over Obamacare
In all the knee-jerk hand-wringing over the announced rate increases for Affordable Care Act exchange insurance, one factor in the increases has been consistently overlooked. On average, states that have been hostile to Obamacare are facing the largest premium increases for 2017. Residents in states that have embraced the law will do much better.
This points to one indisputable flaw in the law as it was enacted in 2010: The ACA gave the states too much power to implement its provisions. Their authority was enhanced by subsequent tweaks to the law by the White House and Supreme Court.
Given the extent to which ideology has clouded minds in many statehouses across the country, this was a real blunder. It was only magnified by the decision of Chief Justice John Roberts to transform the law’s mandated expansion of Medicaid to bring insurance to the poorest Americans into a state-level option.
Charles Gaba, that indispensable tracker of ACA rates and policies, has fleshed out this phenomenon by comparing the weighted average premium increases for states that implemented the ACA cooperatively, even enthusiastically, with the increases in states that have resisted. (Gaba weights the increases by the enrollments of the insurance companies raising their rates.)
He finds that the weighted average rate increase for states that expanded Medicaid is 22.1 percent for 2017; among the 19 states that still have not expanded the program, it’s 28.9 percent. In states that formed their own marketplace to enroll Obamacare consumers, the increase is 17.3 percent; among those that rely on the federal government’s exchange, healthcare.gov, it’s 28 percent.
Finally, among states that refused to allow consumers to remain in pre-ACA insurance plans that didn’t comply with the new law as of 2014, the weighted average increase is 18.8 percent; among those that capitulated to hysteria over canceled pre-ACA insurance plans by grandfathering the non-compliant plans for as long as three years, it’s 28.4 percent.
Put these factors together, and the states that fully embraced Obamacare will see increases of 18.2 percent. Those that fully resist will see increases of 29.8 percent.
“Fully embracing the ACA (expanding Medicaid, running your own full exchange, sticking with the original timeline, etc.),” Gaba observes, “is a pretty good way to help keep rate hikes down.”
A few caveats are in order. Figures for the resisting group may be skewed by Oklahoma, which will experience an off-the-chart premium increase of 76 percent, in part because it has only one insurance provider, Blue Cross/Blue Shield. The effect, however, is marginal, since Oklahoma has only about 164,000 enrollees in ACA plans; Gaba calculates that the total rate increase would fall to 28.4 percent from 29.8 percent if Oklahoma is excluded. California, which has embraced Obamacare and where rates will rise an average 13.2 percent for next year, has about 2.2 million individual market enrollees.
The pro-ACA grouping is similarly skewed by Minnesota, where the weighted rate increase is more than 55 percent, in part because the state’s basic health plan appears to have siphoned off a large number of people who would otherwise be in the Obamacare pool, driving up costs for the latter.
So how many people saw their insurance canceled? Fewer than you think
The enrollment figures include on-exchange buyers and those who have purchased individual plans off the exchanges. The premium rates are pre-subsidy; the vast majority of exchange enrollees are eligible for government subsidies that can cut their monthly costs to as little as a few dollars per month.
Remember that these are averages; some states in the resistance group will have small increases, and some in the embrace group will have large ones. The two states with the lowest increases, for instance, are bluer-than-blue Rhode Island and deep-red North Dakota.
The benefits of Medicaid expansion, in public health and fiscal health, have been well-documented. Expansion states have lowered their uninsured populations and costs to local hospitals of uncompensated care.
The smallest difference in premium increases — albeit still a significant difference — is between states that grandfathered pre-ACA plans and those that held fast to the deadline of Jan. 1, 2014.
The federal government’s decision to allow noncompliant plans to remain in effect was a reaction to a political uproar over cancellations of old plans, which challenged President Obama’s assertion that “if you like your plan, you can keep it.”
This always was a bogus controversy. The category of customers who lost their old plans and couldn’t find new ones for the same rates or less turned out to be minimal — probably about 1 million.
Many health economists thought that grandfathering old plans was a bad idea. Their policyholders had been cherry-picked as low-risk customers, and keeping them out of the overall individual insurance pool was sure to force rates in the pool higher, while fostering confusion among insurers about the market they were serving in the ACA. Those concerns tended to be well-founded.
Michael Hiltzik is a columnist for the Los Angeles Times.