I was intrigued by the recent column “A fix for our broken health care system needs time to work,” by Kansas Reps. Lynn Jenkins, Roger Marshall and Kevin Yoder. I felt like Dorothy in “The Wizard of Oz” when she first meets the wizard. Just as he used special effects, so did our representatives.
These points are true but may not be the whole story:
▪ Obamacare premiums are skyrocketing. Kansans are expecting 42 percent increases in 2017.
▪ Deductibles are growing seven times as fast as wages (same as before Obamacare).
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▪ Providers (I think they mean insurance companies) are exiting the marketplaces.
▪ More than 25 million Americans have no health insurance.
They have a “better way” plan: Build the best health care system in the world that is a patient-centered system with more choices and competition at a lower cost.
What really did happen with Obamacare? I was a health actuary from 1971 through 2014 and am very familiar with what’s behind the curtain.
Cost and cost increases were lower. Let’s compare premiums. We are comparing the second-lowest silver (SLS) Obamacare plan (the most commonly sold) to the most common pre-Obamacare plans sold in the individual market. The most reliable estimate of the average annual pre-Obamacare premium in 2009 is $3,480.
This plan paid 60 percent of expenses billed while the SLS plan paid 70 percent. Published research indicates that rate increases from 2009 to 2013 totaled 38.1 percent. Therefore, that 2009 premium increased to $4,806 for 2013.
The average annual premium for the SLS Obamacare plan in 2014 was $3,800. This is 21 percent lower than the 2013 pre-Obamacare premium and the Obamacare plan has a 10 percent greater benefit. The accumulated increases for Obamacare plans (SLS) have been 38.5 percent. That brings the 2017 average annual premium to $5,264. This is only 9.5 percent higher than the 2013 pre-Obamacare premium of $4,806. However, the SLS plan pays 70 percent versus the 60 percent from the 2013 plan. It seems like Obamacare kept costs lower.
Lower cost increases for employers. Comparing rate increases for employers pre-Obamacare versus after Obamacare also demonstrates lower rates of increase. Using the reported results from the Annual Survey of the Kaiser Family Foundation and Health Research & Educational Trust for 2005 through 2016, I found that the measured annual premium increases per employee from 2005 to 2010 (pre-Obamacare) averaged 4.78 percent per year.
For the period after Obamacare became fully effective (2013 to 2016), measured premium increases averaged 3.42 percent. The lower increase saved employees $166 per year. This is partly attributable to the rate review process in place in most states and the minimum loss ratio requirement that is part of Obamacare.
More competition and choice. The opening of the marketplaces in 2014 had a very favorable impact on the competition and choices available to the individual market. Using the data from the American Society of Professional Estimators, there was an average of 3.73 insurers per state in the 50 states and D.C. in 2010. Number of insurers ranged from only one to as many as seven. With Obamacare, the average jumped to 4.96 per state (2014), 6.08 (2015), 5.69 (2016) and 4.45 (2017). All four years have had more competition than 2010 (pre-Obamacare).
It does appear that Obamacare did meet the more competition and choices and lower cost targets referenced by the “better way.”
The major problem with health care in the U.S. is that it is just too expensive. This has been true for years. We are all to blame, but that is another essay.
Thomas L. Handley has more than 40 years of technical and managerial experience in group insurance and health care.