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Obamacare Caused Premiums to Spike. Here?s How States Are Lowering Them Again.

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Obamacare Caused Premiums to Spike. Here?s How States Are Lowering Them Again.

On 09.10.19 09:16 AM posted by Doug Badger

Throughoutmuch of last year, critics of the White House darkly warned that “Trumpsabotage” of Obamacare would resultin steep increases in premiums for Obamacare plans.

They predicted that Congress’ repeal of thetax penalty on the uninsured, coupled with an administration rule liftingfederal restrictions on short-term policies, would lead to double-digitpremium increases in 2019.

The good news is that none of that has happened.To the contrary, average premiums for “benchmark”plans—policies whose premiums are used in calculating premium subsidies—declinedslightly (0.83%) in 2019, for the first time in the program’s history.

The better news is that this overall decline was driven by sevenstates (Alaska, Maine, Maryland, Minnesota, New Jersey, Oregon and Wisconsin) that obtained waivers to deviate from certain Obamacare mandates.

Premiums in those states fell by a median of 7.48%, while premiums in the other 44 states and the District of Columbia rose by a median of 3.09% (see chart).

The message for policymakers is clear: Innovationby states is the key to more affordable health insurance.

HowObamacare Waivers Work

Section 1332 of the Obamacare statute permits states to seekwaivers from certain federal health insurance regulatory requirements.

States can obtain waivers to tap federal money that thegovernment would otherwise have transferred directly to insurance companies aspremium subsidies and use that money instead to pursue innovative reforms.

Those arrangements must be budget neutral to the federalgovernment.

The waivers that have been granted most commonly are for risk-stabilization programs. Although these programs vary from state to state, they follow the same general pattern: States blend federal premium-subsidy money with funds from non-federal sources to create a fund that helps pay claims for policyholders at risk of incurring high medical bills.

States must submitactuarial analyses showing that their arrangements would not increase federalspending.

WaiversAre Working

Premiums for benchmark plans in 2019 arelower in six of the seven states that have such waivers in place.

The median premium decrease in those sixstates was 10.72%. Premiums rose by a median of 6.32% in 31 of the 44 states andthe District of Columbia that did not obtain waivers.

The median premium decrease in the 13non-waiver states in which they declined was 5.67%, much lower than the mediandecrease in the six waiver states whose premiums fell in 2019.

As of this writing, five additional statesare seeking waivers for the 2020 plan year. Actuarial analyses submitted bythose states forecast premium declines ranging from 5.9% to 19.8%.

ObamacareIsn’t Working

These states are pioneering the way toward making health care more affordable by chipping away at Obamacare’s rigidities.

The law’s architects adopted a Washington-knows-best approach, believing that the law’s tangle of mandates, subsidies, and penalties would result in 27 million people enrolling in exchange-based coverage.

They were wrong.

An estimated 13.7 million people have individual health insurance policies, including policies sold on and off the exchanges, roughly half as many as the Congressional Budget Office forecast. That number has been shrinking since 2016, as premiums rose beyond the reach of people who don’t qualify for government subsidies.

One reason Obamacare didn’t work as plannedwas that the individual mandate didn’t work as predicted. It failed to coercepeople into paying an unattractive price for an unattractive product.

Government estimators were slow to recognizethis failure. The Congressional Budget Office, for example, last year forecastthat mandate repeal would lead to double-digit premium hikes in 2019. That,combined with looser federal regulation of short-term policies, would lead to 16%rise in premiums, according to the Congressional Budget Office.

They were wrong again. Premiums, driven bythe seven states that obtained waivers, fell.

There’s little evidence that the mandaterepeal or the Trump administration regulations led to an exodus of people inreasonably good health from the exchanges. Exchange enrollment held steady at 10.6million.

Overall enrollment in the individual insurance policies fell somewhat in the first quarter of 2019, but the decline was far smaller than in 2017 and 2018 when the mandate still was in effect. Average medical claims in the individual market rose by only 5.4% in the first quarter of 2019, compared with the first quarter of 2018, among the smallest increases since Obamacare’s inception.

Had healthy people dropped out in anysizable number, average medical claims would have risen by a far larger amount.

Obamacare’s Washington-centric approachisn’t working. State innovation is working. Risk-mitigation waivers have shownthat giving states authority to repurpose a portion of Obamacare funds canreduce premiums.

WhatShould Be Next for States?

Risk-mitigation waivers are just the beginningof what’s possible.

The Trump administration has invited statesto submit bolder waiver ideas. It’s receptiveto waiver applications todeliver subsidies through personal accounts and to pursue other creative waysto make health insurance more affordable.

States should take advantage of thatopportunity.

WhatCongress Can Do

Congress should go further by convertingObamacare’s premium subsidies and Medicaid expansion entitlements into fixedgrants that states could use to design and administer programs that increasehealth care choices and reduce costs.

States shouldn’t have to seek Washington’spermission to improve health care for their residents.

The Health Care Choices proposal,endorsed by more than 100 conservative leaders from across the country,outlines how such grants could be structured to finance the development ofconsumer-centered programs adapted to the circumstances of each state.

Congress should pursue that reform.

Obamacare’s centralized, inflexiblestructure is failing consumers. Congress should empower states to lead the wayto reforms that increase health care choices and reduce costs.

The post Obamacare Caused Premiums to Spike. Here’s How States Are Lowering Them Again. appeared first on The Daily Signal.



https://www.dailysignal.com/2019/09/...ing-them-again
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