For the first time since 2014, it has truly been a happy new year for enrollees in individual healthcare insurance markets. According to an analysis by the American Action Forum (AAF), premium prices are holding steady as recent Health and Human Services (HHS) figures point to steady enrollment across the country. This is great news, except to the Chicken Littles across the country that predicted a healthcare Armageddon post-repeal of the Obamacare individual mandate in 2017 and introduction of greater insurance competition in 2018. The lesson is simple for anyone actually paying attention: competition works better to lower prices and increase patient satisfaction than federal fiat ever could.
A decade has passed since the heated debate over the Affordable Care Act (aka Obamacare), but the failed promises and flippant comments of Democratic leadership haven’t been forgotten. Then-President Obama’s “if you like your health care plan you can keep it” assurance was named the “Lie of the Year” in 2013, as millions of Americans had their plans cancelled and faced fines from the Internal Revenue Service (IRS). But all this upheaval was allegedly justified by the tortured logic of Obamacare, that Americans were just too “stupid” to understand (according to ACA architect and economist Jonathan Gruber).
The infamous individual health insurance mandate was “needed” to keep young, healthy twenty-somethings in the system in order to keep insurance costs low for everybody else. If, heavens forbid, people were allowed a choice, the haughty healthiest would bolt and insurers would raise prices on the remaining sickly populations enrolled in Obamacare exchanges across the country. The enlightened elite knew this was no silver bullet and bribed insurance companies with billions of dollars to keep prices low via “Cost Sharing Reduction” payments.
Things started out rocky, but after three years of disappointing Obamacare enrollment, newly-inaugurated President Trump really put things to the test. The new administration nixed the individual mandate, slashed enrollment advertising budgets, and cut off payments to insurance companies. New leadership even committed the cardinal sin of legalizing low-cost plans that were skimpier than what Washington, D.C. bureaucrats preferred. As usual, the Chicken Littles predicted that the sky would fall. But according to data from the Centers for Medicare and Medicaid Services (CMS), things are just fine. The individual insurance market population is holding steady at 8.3 million, little changed from the 8.5 million enrollees last year.
And, yes, some enrollees will inevitably leave the individual market for employer-sponsored care as more people land jobs with increasingly generous benefits. But, according to research by AAF economists Jonathan Keisling and Andrew Strohman, this hasn’t led to appreciable increases in individual plan premiums. They note that, “Benchmark plans from 2019 that are still offered in 2020, even if not as the benchmark, rose by less than 1 percent—the lowest average increase since the ACA marketplaces began operating.” The very cheapest plans offered on exchanges decreased in price by an average of 3 percent, offering healthcare shoppers more cost-effective options as take-home pay increases across the country.
Obamacare architects such as Dr. Gruber and House Speaker Nancy Pelosi (D-Calif.) must be wondering how their “understandings” of healthcare markets were so off for such a long time. As it turns out, healthcare markets are complicated ecosystems that regularly defy the brazen engineering attempts of officials and lawmakers. Bureaucrats also typically underestimate the impact of competition in defraying costs and affording patients more options. Rules finalized in August of 2018 allow consumers to purchase “short duration” plans, renewable for up to three years. These options may not have the smoking cessation or maternity care policies that characterize more-expensive plans on Obamacare markets, but not all patients need those expensive “essential benefits.”
And when patients start flocking to short duration plans, ACA insurers have little choice but to lower their premiums and lure shoppers back to them. Some price back-and-forth can go a long way toward stabilizing the healthcare sector, which is dysfunctional in the first place due to runaway government giveaways and rulemaking. By continuing to allow for more plan choices, policymakers can give patients a chance to enjoy this new year and many more to come. Obamacare is the past, but patient choice is the future.
Catalyst articles by Ross Marchand