By John C. Goodman
Originally posted on Forbes, November 2015
The Obama administration claims that the premium increases in the (Obamacare) health insurance exchanges are averaging 7.5 percent across the country. That figure, however, turns out to be wrong. An analysis by the Daily Caller News Foundation says that the real increase is 20.3 percent – almost three times higher.
Why the difference? The administration looked only at the prices of Silver plans, ignoring the prices for Bronze, Gold and Platinum alternatives. The Daily Caller, by contrast, looked at all four metallic levels. Furthermore, Richard Pollock explains that:
The 20.3 percent figure is the average for all plans. Premium increases in some states will be much higher. In Utah, for example, some enrollees in an individual plan will face a 45 percent price jump. In Illinois, the highest price hikes for individuals in the federal exchange will be 42.4 percent. Some insurers in Tennessee will experience a 36.3 percent price rise.
The Obama administration says that people will be able to avoid high premium increases in many cases by switching plans and it is encouraging enrollees to shop and compare premiums during the current open enrollment period. However, a Morning Consult poll finds that almost half (47 percent) of respondents plan to sign up for the same health plan they already have. Only one-third of say they plan to shop for a new plan.
There are good reasons for the reluctance to change plans. The most important is the potential lack of continuity of care. Once people find doctors they trust they are reluctant to switch to a new set of doctors – providers they have never met.
Another reason is concern over privacy. Writing at the Morning Consult, John Reid notes that:
Americans are also less confident that their private information is secure on the Obamacare exchanges. In a September 2014 poll, 43 percent of respondents said they thought their private information was safe on HealthCare.gov or a state Obamacare exchange. This year’s poll put that percentage down to 34 percent.
The shift in secure health web sites comes amid high-profile cyber attacks on health plans across the country. In one such attack, hackers were able to steal the Social Security numbers of 10.5 million customers covered by the New York health plan Excellus BlueCross BlueShield.
But even if people remain in the plan they have, the plan itself may change. Writing in the Washington Times on Sunday, Sen. John Barrasso (R-WY) explains that:
In some states, plans are changing dramatically even if the company remains. A patient may find that her longtime doctor will no longer be a part of her plan’s network. Maybe the hospital nearest to her home is no longer included by her insurance. These kinds of changes can leave people with very different coverage than they had before.
As people work their way around the website, they may notice that the remaining options are slimmer than ever. Analysts at the Robert Wood Johnson Foundation say that more of the choices will be HMOs this time around. That can mean narrower networks and no out-of-network coverage.
Meanwhile, a significant number of enrollees have dropped their coverage, in part because of the higher premiums they are already being forced to pay and the narrowing choices of providers. For example, between January and September of this year, 1.8 million people (more than 10 percent!) allowed their coverage to lapse by not paying their premiums.
And although the Obama administration has stressed that the Obamacare model is based on the idea of competition, most of the insurers lost money last year and many of them are leaving the market. Robert Pear and Amy Goodnough wrote last Saturday in The New York Times:
[A]n administration report said Friday, only one insurer is offering coverage in the marketplace in Wyoming, and consumers have a choice of just two insurers in Alaska, Hawaii, Oklahoma, South Dakota and West Virginia. And that data, current as of Oct. 19, did not reflect the recent collapse of nonprofit insurance cooperatives in South Carolina and Utah.
The Obama administration is now predicting a leveling off of enrollment and more than one observer is asking whether we are headed toward a death spiral in some or all of the exchanges.
This article was originally posted on Forbes on November 4, 2015.