The Trump administration recently released a report showing that health insurance premiums in Maine have jumped 55 percent under Obamacare. Nationally, monthly premiums have doubled for Americans in the Obamacare market since the health reform law took effect, it found.
The timing was notable. The report came out just before the Congressional Budget Office released its eagerly anticipated scoring of House Republicans’ plan to replace Obamacare. The CBO — tasked with projecting the law’s real-world costs — expects their legislation to leave 23 million Americans without health insurance over the next decade.
The CBO didn’t release state figures, but a separate analysis by the progressive Center for American Progress estimates that 117,000 individuals would lose coverage in Maine.
With that backdrop, the new report on premiums gave Republicans some handy ammunition to fire back and remind everyone just how terrible (they think) Obamacare is.
The headline on a Maine GOP statement about Obamacare last week:
“Cost for Mainers Rose 55% Since 2013, Mainers Now Have Less Choice And A Higher Premium”
As you might expect, there’s more to this story than the headline figures. Here are the major points to keep in mind:
Average premiums under Obamacare are undoubtedly up.
The report, issued by an agency that advises the U.S. Department of Health and Human Services on policy issues, examines premiums in the “individual market.” That’s people who buy their own health insurance (the self-employed, early retirees, etc.) through Healthcare.gov. So we’re not talking about people with coverage through work or government programs such as Medicaid and Medicare.
The report compares average premiums in 2013, the last year before new health policies had to fully conform to Obamacare regulations, to those in 2017. The feds had to use two different data sources to cover the full four-year period, but they stated that upfront, recognizing that it’s not a “perfect comparison.”
In Maine, the average monthly premium in 2013 was $335. It jumped to $518 in 2017, an increase of nearly 55 percent. Not great for Obamacare.
But context is everything.
Most Obamacare consumers don’t actually pay those premiums.
Under Obamacare, most Healthcare.gov shoppers receive financial assistance to help them afford their premiums. So the majority aren’t actually paying the amount that the report cites. In Maine, about 85 percent of the roughly 80,000 residents insured under Obamacare in 2017 qualified for the subsidies, based on their income.
In an earlier report, the same agency, called the Office of the Assistant Secretary for Planning and Evaluation (ASPE), projected that even with a premium jump of 50 percent this year, 77 percent of Maine residents could still buy a plan for $100 or less a month.
Taxpayers foot the bill for those subsidies, and critics of Obamacare argue that premiums aren’t really “affordable” if the rest of America has to pay for them.
Pre- and post-Obamacare premiums are apples and oranges.
Before Obamacare, health insurers could do a lot of things to keep their costs, and therefore their customers’ premiums, down. They could deny coverage to people with pre-existing conditions, such as cancer, HIV/AIDS, or hepatitis. If insurers aren’t paying for people to get treatment for all those ailments, it’s much easier to keep costs lower.
Insurers could cut off coverage when policyholders hit annual or lifetime limits on their benefits. That saved them money too.
Plans were also skimpier before Obamacare. Many wouldn’t cover mental health or maternity care, for example.
You can see how comparing premiums from before the law’s implementation to after, when health insurance as a product improved greatly for millions of people, is tricky business.
That being said, Maine banned all three of these limits on coverage even before Obamacare, although with some important exceptions and not to the same extent. So pre- and post-Obamacare premiums are more comparable here than in other states.
Premiums were increasing before Obamacare.
In all this talk of rate hikes under Obamacare, I think many people get the impression that premiums were falling before the law. That’s not the case. Rising premiums are a big part of why Obamacare was passed in the first place.
Here’s what average premiums in the individual market looked like in Maine before the law. They jumped to $334.28 a month in 2012, up nearly 10 percent from 2011. Rates rose again but not by much in 2013 (read about how Maine Republicans take credit for that and skeptics doubt their claims here).
That raises a question, posed by, among others, Charles Gaba, a Michigan web developer who has gained attention for his analysis of Obamacare enrollment numbers:
“How much would the premiums have gone up otherwise if the ACA hadn’t been signed into law? If you’re going to ‘blame’ the ACA for rate hikes, you have to subtract the difference between how much they would have gone up in the absence of the law.”
Given the inflation rate and the rising costs of the medical care that insurance pays for, he estimates that Obamacare is responsible for an 83 percent average net increase in premiums nationally, not 105 percent as the new report found. Still a big increase, but that’s primarily because insurers “have to actually cover healthcare and carriers can no longer cherry-pick who they’re sold to,” he writes.
Under congressional Republicans’ plan, the American Health Care Act, average premiums would drop overall, but older, sicker Americans could pay much more and insurance would cover less, according to the CBO analysis.