Obamacare premiums will rise an average of 5 percent a year over the next decade, much higher than the annual inflation rate, the government’s chief scorekeeper predicted Thursday, saying that while the 2010 health care law is stable, the government will have to pump in more money per customer to keep it running.
Enrollment is coming in far below predictions. The Congressional Budget Office now estimates that just 12 million customers will buy insurance on the exchanges in 2027, down from the 18 million projected last year.
Overall, Obamacare is costing less than anticipated, but that’s because fewer people are enrolling, the CBO said. When figured on a per-enrollee basis, taxpayers are shelling out more, paying ever-higher subsidies to help low- and middle-income Americans afford insurance.
Within a decade, each person getting subsidized coverage will cost the government an average of $8,600, up from $5,550 this year.
Premiums are spiking because young and healthy customers didn’t sign up in large enough numbers in Obamacare’s early rounds, leaving insurers with a sicker, costlier customer base. Some plans have requested double-digit increases for two years in a row, while others have dropped out altogether.
Under President Obama’s framework, taxpayer subsidies rise with the cost of midtier “benchmark” plans, absorbing the cost for most consumers but forcing taxpayers to pony up more for the program.
“It’s a sign of a poorly designed program, but I don’t think it rises to the attention of the average taxpayer,” said Douglas Holtz-Eakin, president of the American Action Forum and former CBO director, who said bigger drivers of spending eclipse the dynamic.
The CBO said the administration is making matters worse by waffling on key decisions. Overall, premiums for benchmark plans will rise 15 percent next year alone, though they will drop in 2019 if the administration can settle the markets.
Enrollment is predicted to rise slightly next year, from about 10 million to 11 million, dampened in part by President Trump’s decisions.
“That increase in enrollment in 2018 is limited by projected premium increases due to near-term market uncertainty and by announced reductions in federal advertising, outreach, the enrollment period and other enrollment efforts, which push enrollment down,” analysts said, referring to the Trump administration’s decision to slash advertising and sign-up assistance by more than $100 million before enrollment season begins Nov. 1.
Democrats held up that part of the report as evidence that Mr. Trump is trying to sabotage his predecessor’s signature domestic achievement.
“By hindering Affordable Care Act outreach through funding cuts and creating uncertainty in the marketplace, Trump is causing premiums to increase and stifling enrollment in 2018 and beyond,” said Democratic National Committee spokeswoman Adrienne Watson.
Democrats say Obamacare is stabilizing after a tumultuous start, with insurers raising prices enough to break even or make a profit, and that public opinion is turning in favor of their 2010 signature law.
Republicans, who now control Congress, say enrollment is stalling because the public doesn’t like expensive and overly prescriptive plans in the exchanges.
Medicaid enrollment will continue to rise from 63 million this year to 70 million by 2027, with more states enticed into the Obamacare expansion.
Mr. Trump’s attempt to rally his Republican allies behind an Obamacare repeal bill fell short this year, opening the health care debate to a range of options on Capitol Hill.
Four Senate Republicans are pushing a last-ditch bill to replace Obamacare with block grants that empower states.
“They will find solutions that work better for their state than the Affordable Care Act,” said Sen. Bill Cassidy, Louisiana Republican.
From the left, a sizable number of Democrats are looking beyond Obamacare and pushing a government-run, single-payer program that they have dubbed “Medicare for all” to cover every American.
Meanwhile, a bipartisan crop of senators wants to strike a compromise that bolsters the existing program, ponying up enough federal money to prop up Obamacare’s exchanges — a win for Democrats — in return for giving states greater flexibility to shape their markets.
“To get a result, Republicans will have to agree to something that many don’t want to agree to — additional funding through the Affordable Care Act,” said Sen. Lamar Alexander, Tennessee Republican and chairman of the Health, Education, Labor and Pensions Committee. He wants to strike an agreement in the coming days so Congress can act before the end of the month.
Insurers must decide this month whether to participate in the Obamacare marketplace for 2018.