The administration insisted Wednesday that big Obamacare rate hikes are coming to an end, and after next year the market will finally stabilize as companies figure out how to handle the sicker customers they’re seeing.
Andy Slavitt, acting administrator for the Centers for Medicare and Medicaid Services, said businesses didn’t know what to charge when Obamacare fully kicked in for 2014, though he said they’re getting up to speed now.
But with insurers dropping out and nonprofit cooperative plans shutting down, leaving some consumers with only a single choice of company, Republicans said the country can’t wait for things to get better.
“Have you shared this information with Aetna, United and Humana? Because the fact that they bailed out of the market, saying this is out of control — maybe you have a breakthrough these companies haven’t seen,” Rep. Tim Murphy, Pennsylvania Republican, told Mr. Slavitt, who appeared before the House Energy and Commerce Committee.
Customers will get a complete look at 2017 Obamacare rates shortly before Election Day, but early signals are not promising for the administration’s goal of keeping costs in check for those buying plans on the Obamacare exchanges.
Mandy Cohen, chief operating officer at the Health and Human Services Department, said taxpayers will pick up most of the tab as subsidies absorb the “vast majority” of the increase. She called 2017 a “transition year for the marketplace.”
Risk programs that mitigate insurers’ losses are expiring, while some insurers are realizing they were losing money after Obamacare prevented them from denying coverage to sicker customers.
“No one knew how much it was going to cost to start covering everyone,” Ms. Cohen said. “As a result, some marketplace issuers initially priced below the cost of new enrollees, and now they need to catch up.”
But Senate Majority Leader Mitch McConnell, Kentucky Republican, on Wednesday said the law is already “a direct attack on the middle class” — an argument that Republicans parroted to administration officials who appeared before a pair of House committees.
Oversight Chairman Jason Chaffetz, Utah Republican, said insurers in his state requested rate hikes of 30 percent, and other states are faring even worse.
“You can keep putting lipstick on it, but it doesn’t look good and it ain’t good,” he said. “So, premiums will go down, HealthCare.gov will work — these are all things that they told us would be just great. Co-ops, they’d be there. They’re failing, failing and failing.”
Health Republic of New Jersey on Monday said it would not offer plans in 2017, meaning all but six of the initial 23 coops have failed, despite more than $2 billion in taxpayer-funded loans. Recent estimates suggest that nearly a third of U.S. counties will have only one insurer to choose from on their exchanges in 2017, raising fears that decreased competition will result in even higher premiums down the road.
Sen. Lamar Alexander, Tennessee Republican, and seven other Republicans introduced a bill Wednesday that would allow customers in states with few choices on the exchange to use their government subsidies on plans that are offered outside of Obamacare’s portal. States would have to notify HHS by Nov. 1 if they planned to use the option, which would only be in effect for 2017.
Obamacare’s “individual mandate” penalty requiring Americans to hold insurance or pay a tax penalty would not be enforced in these states.
“This one-year solution is not a substitute for the long-term need to repeal and replace Obamacare with step-by-step reforms that transform the health care delivery system by putting patients in charge, giving them more choices and reducing the cost of health care so that more people can afford it,” Mr. Alexander said. “That would require a Republican president next year, but it gives Americans a real solution for next year and lets them know that we are on their side.”
Hoping to preserve Obamacare moving forward, the administration is urging young, healthy enrollees to sign up when enrollment begins on Nov. 1, so insurers make money and keep premiums down.
It’s also making it harder to enter the exchanges outside of the normal enrollment period, so customers don’t wait until they are sick to start paying into the program.
“From the outset, we knew that like Medicare, the implementation of the Affordable Care Act would be a multiyear process,” Mr. Slavitt testified, comparing the process to the decadeslong effort to insure Americans over age 65.
Democratic backers said the insurance landscape was even bleaker before Obamacare, when “people who were lucky enough to get health insurance were often stuck with whatever premiums their insurance companies decided to charge,” said Rep. Elijah E. Cummings, Maryland Democrat, said.
“Unfortunately, my Republican colleagues do not want to talk about these facts,” he said. “They want to attack the ACA for political reasons without offering solutions of their own.”