It’s that time of the year again: Obamacare open enrollment time. Which of course means it’s time for the yearly round of crying and calls for repeal of the law from Republicans. But data on the Affordable Care Act shows not only that more people now have insurance coverage, but it is also showing that in this instance at least, well-regulated Capitalism works.
Before diving into some of the specifics, it’s important to remember this fact: the law isn’t perfect. But hell, what law that has ever been written was perfect right out of the box? For the time being at least, we’re stuck with it the way it is, because Republicans don’t want to make it better — they want to destroy it.
One of the biggest complaints you hear from the right about Obamacare is its cost. Every year, there are stories all over the right-wing universe (and even some in the normal universe) about “massive Obamacare premium increases.” Yes, there have been some rather steep premium increases for some people in some markets, but as The National Journal pointed out last June, those increases are not as common as Republicans would like you to believe.
It’s true that since the start of the ACA there have been increases in premiums for many people each year. But what Republicans are not telling you is that before Obamacare, premiums were increasing at a greater rate than they are now. According to CNBC, the year before Obamacare went into full effect the average premium increase on the individual market was 11.7 percent. For 2016, the average increase in what is referred to as the “benchmark” silver plan nationwide is 10.1 percent.
The financial website The Motley Fool offers three reasons why premiums are increasing as much as they are. The first one is that the medical loss ratio in some states is too high. Insurance companies are required to spend at least 80 percent of the premium dollars they take in paying for health care of their customers. That’s the medical loss ratio. In some states, that has actually been over 100 percent, meaning that the insurance companies are losing money.
A second reason for premium increases is that fewer young people than expected are signing up for plans. Instead, they are choosing to pay the penalty for not having insurance, which is cheaper than many insurance plans, and taking the chance that they won’t get sick. Young people are important because they will tend to use fewer health services, meaning their premium payments would help keep prices lower.
The third reason is because it appears that the Congressional Budget Office was fairly far off on its estimate of how many people would sign up for Obamacare. Smaller pools of insured equal higher premiums.
Here’s something else that Republicans don’t want to talk about: Obamacare seems to be proving that capitalism works. That should make them happy, right? Apparently not. To them, it’s still a “government takeover of health care.” But the law was crafted to encourage competition in the insurance market, and in many states, that is exactly what it has done, to consumers’ benefit.
The Kaiser Family Foundation (KFF) is one of the best unbiased sources of health care information in the country. KFF has identified another reason for premium increases in some states: a lack of competition.
We found that 40% of counties in states using Healthcare.gov will have just one or two insurers, up from 35% of counties in 2015. With fewer than 3 insurers, these counties may not benefit from insurer market competition to hold down premiums or offer plans with better value.
So if you live in a state that doesn’t have a state exchange, you may find that you have fewer choices of insurers and plans. Among states that use the federal exchange either alone or in a federal-state partnership, there are 12 that have three or fewer insurers. Out of those 12, only Mississippi has seen a decrease in the premium for the benchmark silver plan. In all but three of the other 11 premiums for that plan have increased by much more than the national average. For states with their own state exchanges, only Vermont, Rhode Island, and Washington D.C. have three or fewer insurers to choose from. And in all three of those states, premium increases have been very small.
Looking at the numbers in a slightly different way, we see more confirmation that fair, regulated market-based capitalism can and does work. Without exception, every state that has seen a decrease in the average cost for a benchmark silver plan has three or more insurers to choose from. That’s 12 states, and out of those 12, all except Mississippi have more than the three insurers that KFF says is the minimum a marketplace needs to guarantee competition.
Now, the other dirty little secret that Republicans don’t want you to know about Obamacare premiums: because of eligibility for subsidies, the cost of the benchmark silver plan for a 40-year-old non-smoking male, which is the standard that KFF uses to look at costs, has actually gone down in most states. Only in five states out of 50 will that 40-year-old man pay more for his plan in 2016, after premium subsidies are applied. The table below shows KFF’s numbers for the cost of this benchmark plan.
All of this brings us back to the original question: Obamacare is proving that capitalism works, so why do Republicans hate America?
Featured image via The Brookings Institution