NCPA - National Center for Policy Analysis

Has Obamacare Lowered Premiums?

September 12, 2014

Many Obamacare supporters are rallying around a recent Kaiser Family Foundation survey of health care premiums that indicates prices are falling, claiming it as evidence that the law, in fact, has worked in reducing costs. Is that really the case?

According to James Capretta at the Weekly Standard, the survey is flawed. For example:

  • It is not a nationwide survey, rather a survey of 16 metropolitan areas.
  • The plans that it examined were not weighted based on the number of individuals enrolled in them, so it is not a good standard by which to judge premium trends.
  • Finally, the risk corridor provisions in Obamacare -- which promise to bail out insurers if they lose money in the exchanges -- incentivize companies to submit low premium bids in order to attract enrollees.

Capretta encourages Congress to repeal the risk corridor provisions. Indeed, this is something that Senior Fellow John Graham told legislators in testimony before the House Committee on Oversight and Government Reform's Subcommittee on Economic Growth. And in a recent publication on the taxpayer bailout provisions, Graham urged lawmakers on Capitol Hill to limit taxpayers' liabilities for insurance companies' losses

Moreover, Capretta writes that Obamacare's problems continue in other areas. The website is still a mess, allowing people to enroll in health care plans without verifying whether they are eligible for federal assistance. Consider:

  • Millions of enrollees receiving subsidies reported income data that varies from government data, while others are illegally in the United States.
  • Almost 100,000 people in Florida alone may soon lose their insurance coverage because they are unable to provide proof of their legal status in the country.
  • Some enrollees are dropping out of plans or have ceased premium payments. Aetna, one of the nation's largest healthcare insurance providers, expects 30 percent of Obamacare enrollees to drop out of their plans before the end of the year.

Most likely, says Capretta, the 8 million who enrolled in Obamacare plans as of April will not all remain insured by the end of 2014.

Source: James C. Capretta, "The Reality Behind the Latest Pro-Obamacare Spin," Weekly Standard. September 8, 2014.

 

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