New Obamacare Report’s Ominous Predictions: Future Holds More #BrokenPromises, Cancelled Plans, and #RateShock
The Washington Post reports that the future of the health care law may just feel like déjà vu all over again: premiums increasing and plans being cancelled because of the law’s requirements. A new report predicts that enrollment will fall off beginning in 2017, decreasing “below 2015 levels by 2024.” Why? First, premiums will likely skyrocket (again) in part following “the scheduled expiration of ACA programs meant to blunt major rate hikes.” (Those are the same programs under which the legality of potential payments was questioned by a nonpartisan Congressional Research Service memo released by the Energy and Commerce Committee.) Second, “Parente estimates between 4 million and 6 million people will see their existing individual coverage end in the next few years when either their plans lose grandfathered status or the White House’s extension of non-compliant health plans run out near the end of 2016.”
May 27, 2014
Why the Major Test for Obamacare Premiums Might Wait Until 2017
The health-care story of the summer will be 2015 premiums, but a new analysis suggests 2017 could be the key year for gauging the Affordable Care Act's implementation.
Stephen Parente, a University of Minnesota health economist who advised Sen. John McCain's (R-Ariz.) 2008 presidential campaign, used the Obama administration's final 2014 enrollment reports and his microsimulation model to project health plan prices and enrollment over the next decade. His projections, shared first with the Washington Post, find an increase in individual plan enrollment in 2015 and 2016, before sharply dropping off in 2017 and then slowly decreasing below 2015 levels by 2024. At the same time, he projects a steady decrease in employer coverage that will be steeper than the gains in Medicaid enrollment, resulting in a greater number of uninsured 10 years out. …
So, how does Parente's model explain the big drop-off in coverage between 2016 and 2017? He cites two major factors: the scheduled expiration of ACA programs meant to blunt major rate hikes and the phasing in of new health plan requirements as old health plans come to an end.
On the first point, the temporary reinsurance and risk corridor programs are scheduled to end in 2016. These programs are designed to stabilize premiums as insurers adjust to the health-care law's new coverage requirements, with the idea that the reformed market will settle within three years.
To the second point, Parente estimates between 4 million and 6 million people will see their existing individual coverage end in the next few years when either their plans lose grandfathered status or the White House's extension of non-compliant health plans runs out near the end of 2016. These holdovers from the individual market predating the ACA are expected to be younger, healthier and more sensitive to price.
Parente's model finds these factors will have the most significant affect on 2017 premiums for less-robust plans in Obamacare's "metal tiers." These include catastrophic and bronze-level health plans, which have the cheapest premiums but the highest out-of-pocket costs. The effects will differ by state, but the national picture shows a big price jump for bronze and catastrophic plans between 2016 and 2017 — premiums for the average individual bronze plan, before subsidies, are projected to climb between $2,132 and $4,174 between those two years.
Read the article online HERE.