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Democrats' 5 Lamest Excuses For Obamacare's 22% Premium Hike

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On Monday, the Obama administration announced that premiums in Obamacare’s insurance exchanges would increase by an average of 22% in 2017. That’s far worse than what many observers had expected. But the biggest surprise hasn’t been Obamacare’s rate hikes. It has been the implausible excuses the President and his cheerleaders have floated to deflect blame for unaffordable coverage.

Obamacare’s history of rate shock

2017 isn’t the first year to see Obamacare rate hikes. The most profound hikes took place in 2014, Obamacare’s first year, when the health law’s thicket of insurance regulations drove up the cost of coverage by an average of 49%. Premiums for Obamacare “silver” plans went up by 7 and 11% in 2015 and 2016, according to McKinsey & Co. Add onto that the reported 22% increase in 2017, and you have a cumulative increase of 116%: more than double the pre-Obamacare rate.

As a result of these high premiums, far fewer people are enrolling in Obamacare’s exchanges than the government predicted in 2010 when the law was passed. Back then, the Congressional Budget Office predicted 21 million Americans would be enrolled in ACA exchange plans by 2016. Instead, it was 12 million.

Excuse #1: Few Americans are affected by Obamacare’s premium hikes

The Obama administration is trying to claim that Obamacare’s premium hikes aren’t that big a deal, because few people have enrolled in Obamacare exchange-based plans. “This is only for people who are buying their health [coverage] on the exchanges. It’s around 3 percent of the country,” argued former Obama official Austan Goolsbee on The Kelly File. But Austan and others have it economically backwards.

There are three categories of people affected by Obamacare's exchange premium hikes. The first are people enrolled in exchange-based coverage: the 3 percent. The second are people who are enrolled in off-exchange individual market coverage: another 2.5 percent. The third are the thirty million people who remain uninsured because they can't afford Obamacare-based premiums: another 10 percent.

Add all those people up, and you get to over 50 million Americans: roughly one-sixth of the population.

Excuse #2: Obamacare’s premium hikes don’t matter, because we can subsidize them

The Obama administration’s rate hike report spilled a lot of pixels noting that 84 percent of Obamacare exchange enrollees receive some sort of taxpayer-funded subsidy, and that many of these individuals will be insulated from the worst of the premium hikes as a result. That’s true: but only for the time being.

A somewhat obscure provision in Section 1401 of the Affordable Care Act specifies that once exchange subsidy spending exceeds 0.504% of GDP, Obamacare subsidy spending can only increase by a formula tied to inflation. The Congressional Budget office expects us to hit that trigger point sometime around 2023.

Once that clause is triggered, everyone on Obamacare’s exchanges will be exposed to rising premiums. And enrollees will begin heading to the exits.

Excuse #3: Premiums would be even higher if Obamacare hadn’t passed

Another excuse we’re hearing from the President and others—and it’s more fantasy than excuse—is that premiums would actually be higher in the individual health insurance market if Obamacare hadn’t passed.

As a reminder, premiums have gone up by a cumulative 116%, on average, under the ACA. That is way above normal health care inflation. According to research from the Commonwealth Fund, for example, the average employer-sponsored family health insurance plan cost $12,298 in 2008, and $16,029 in 2013: an annualized increase of 5.4 percent. Over four years, that translates to a cumulative increase of 23.6 percent.

In other words, without Obamacare, we might have seen a 24 percent increase in insurance premiums, if past trends had continued. Instead, thanks to Obamacare, we saw a 116 percent increase.

Chris Conover discusses this topic extensively in a new post at The Apothecary.

Excuse #4: Premiums are high because Republicans oppose Obamacare

According to some Obamacare supporters, the low enrollment figures aren’t due to the law’s high premiums. They’re due to Republican opposition to the law. “Republicans are discouraging people from signing up,” argues Goolsbee.

Progressives often point to Massachusetts, where Romneycare was passed on a bipartisan basis, and Boston Red Sox teammates cut public service announcements encouraging people to sign up. “The Massachusetts campaign,” wrote Obama adviser Zeke Emmanuel, “help[ed] establish the norm—that everyone needs to have health insurance.”

If only the GOP could get behind Obamacare, goes the excuse, people would ignore the fact that their premiums have doubled, and sign up because their favorite pro athlete told them to. That’s not likely.

Excuse #5: Premiums are high because Republicans won’t do what Democrats tell them to do

The next excuse is that it’s Republicans’ fault that Obamacare isn’t working, because Republicans won’t simply go along with the changes that Democrats want to make to Obamacare, because Republicans are blinded by partisan rage instead of a desire to help people.

To examine this excuse, we have to understand what changes Democrats what to make. To pick a Democrat at random, Hillary Clinton wants to do three things to Obamacare, none of which will do anything to reduce the underlying cost of Obamacare-sponsored insurance.

Hillary wants add new regulations to the ACA exchanges, such as capping out-of-pocket limits and forcing insurers to offer more generous coverage. This won’t decrease premiums; it’ll further increase them.

Hillary wants taxpayers to pony up more subsidies to help bail out Democrats for causing higher premiums. That will have no effect on underlying premium costs; all it will do is paper them over with other taxpayers’ money.

Finally, Hillary Clinton wants to add a “public option” to the exchanges, which will have no effect on premiums unless it is accompanied by strict price controls on hospitals and doctors that not all Democrats support.

It’s not at all strange that Republicans are skeptical of Democrats’ plans to add more regulations, more subsidies, and more mandates to Obamacare. Republicans oppose these changes because they won’t reduce Obamacare’s costs. They won’t “fix” Obamacare, but make it worse.

We haven’t heard the last of bad news for Obamacare

Things are going to get even worse for the Obamacare exchanges. Premiums will continue to rise as those most exposed to premium hikes leave the market. Enrollment in the exchanges will plateau and may even decline in ensuing years. And nothing that Hillary Clinton wants to change about Obamacare will do a thing to fix it.

At some point, it is Obamacare’s cheerleaders who are going to have to confront the fact that the way they designed Obamacare is directly responsible for its problems. They'll need to open the door to a more bipartisan, patient-centered approach. That time is coming.

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NOTE: In the Kelly File video above, I misspoke regarding the cumulative Obamacare premium increases. From 2013 to 2017, the average cumulative increase was 116 percent, not 126 percent.

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