Health Reform: Insurers are starting to announce their ObamaCare premiums for next year and they're at high double-digit rates. For journalists and Democratic activists (is there any difference these days?), this is the direct result of Republicans' threat to repeal ObamaCare. But that's not what insurance companies are telling state regulators.
Here's how the Democrats' story goes. After a rough start, ObamaCare was finally on the mend. Those massive rate hikes and insurance defections of last year were a thing of the past, and there was no truth to claims that ObamaCare was in a "death spiral."
"The market is stabilizing," Karen Pollitz of the Kaiser Family Foundation told one news outlet recently. "I think insurers are getting the hang of it."
But all the talk of repealing and replacing ObamaCare, the story continues, now has insurers rattled. "The debate has created one thing insurers hate above everything else: uncertainty," claims NBC News.
Aetna (AET) is pulling out of its remaining ObamaCare markets, Anthem (ANTM) is threatening to do the same. Iowa could have no insurers in the ObamaCare exchange. And now insurers in Connecticut, Maryland and Virginia announced massive rate hikes for next year that top 58%. The average hike in Virginia will be nearly 31%, according to one estimate.
Even by ObamaCare standards, the proposed increases were shockingly high. And most likely these three states — which have early deadlines for rate filings — are just a harbinger of more bad ObamaCare news across the country.
And, as night follows day, Republicans will be blamed for it all.
There's just one problem with this story.
It is not true.
Last year, insurers announced massive rate hikes, as they did the year before, and the year before that. Yet that was when nobody had a reason to think ObamaCare's future was in doubt. So why, defenders of ObamaCare should be asked, are the double-digit rate hikes this year suddenly the result of "uncertainty"?
More important, however, is the fact that insurers aren't citing this supposed "uncertainty" in their rate requests.
We dug out the filings that insurance companies have made in Connecticut, Maryland and Virginia.
What insurers are saying is that the ObamaCare markets are continuing to deteriorate, as they have for years, with mostly older and sicker people signing up, while the young and healthy avoid ObamaCare's overpriced coverage. The result is a sicker insurance pool that requires higher premiums to cover, which then drives out more young and healthy people, setting off another round of rate hikes.
Here's what Anthem said in its Virginia filing to explain why it wants premium hikes averaging 38% there: "We have continued to experience increased benefit costs for individual ACA-compliant products, and this reality is reflected in our filed rate adjustment."
It goes on to say that "we are also forecasting an acceleration of the current trend where individuals with greater health care needs are more likely to keep their coverage in a guaranteed issue market with rating constraints and an individual mandate penalty that is far smaller than the cost of coverage for most individuals."
In Connecticut, where Anthem wants a 34% increase, it said that costs in the ObamaCare market have "continued to outpace premium increases."
To justify its 37% rate hike to Maryland regulators, Cigna said the main drivers are "underlying claim costs (that) are expected to increase," and the fact that the risk pool in Maryland "was more adverse than assumed in the current rates."
Kaiser told Maryland that its 18% rate hike is "primarily driven by the claims experience, ... medical inflation, taxes and fees imposed on the issuer."
ConnectiCare said it was basing its 15.2% rate hike on "increasing medical costs and greater demand for medical services." It also noted that nothing about the ObamaCare law would change for next year.
The CEO of CareFirst told the Washington Post that his company is jacking up premiums 52% in Maryland because "the pool of beneficiaries is becoming sicker, in part because healthier people are not coming in at the same level we hoped." He said its proposed rate increase assumed that Congress doesn't change anything about ObamaCare's cost-sharing subsidies.
There's one other factor driving premiums up in 2018 that Democrats and their friends in the media are ignoring. That's the return of the Health Insurance Tax, a $14 billion nondeductible sales tax charged to insurers.
Congress suspended the tax for 2017 in hopes that it would keep premium hikes low that year. That didn't work, of course, but now the tax is coming back for 2018, and every insurance filing we examined cites it as an important contributor to their proposed hikes.
Notice what's missing here. While some mention regulatory uncertainty, they are not blaming it for the magnitude of the rate hikes they're proposing.
The rate filings all assume, for example, that ObamaCare's "cost reduction subsidies" are paid in full next year. Trump had threatened at one point not to cover those costs.
In fact, in some ways Trump has worked to stabilize the ObamaCare markets, which Anthem notes in its Virginia filing, citing "helpful regulatory improvements" as a mitigating factor. Nevertheless, Anthem says, these improvements aren't enough to overcome the fact that costs "continue to outpace premiums on a large scale."
The inconvenient truth for Democrats is that ObamaCare is failing, and will continue to fail no matter what the GOP does. It is unsustainable and must be replaced. If Democrats wanted to act like mature adults, instead of petty partisans, they'd be as eager to find a replacement for ObamaCare as the GOP is.