While the study was clear about its methodology and was up front with its many caveats, it’s still an oversimplification to argue that Obamacare raised premiums without acknowledging the study’s apples-to-oranges comparison. And to the extent that consumers did see premiums rise after the Affordable Care Act, it’s important to note that the plans they are receiving now generally cover more, and that many consumers receive subsidies blunting the increases.
The report doesn’t show what some Republicans are claiming it shows.
GOP lawmakers were quick to tout the report as justification for their Obamacare repeal effort, claiming “premiums have more than doubled since ObamaCare went into effect.”
This is a mischaracterization. For one, it’s apples-to-oranges to compare the premiums of people in the entire individual market in 2013 versus those receiving HealthCare.gov plans, which make up only a portion of the individual market, in 2017 (more on that below).
Just as misleading, however, is not mentioning that many people enrolled in the plans examined in the report are receiving subsidies under the Affordable Care Act that blunt those increases. This qualifier is mentioned only in a footnote in the report, and Republicans certainly have downplayed the role the tax credits currently play in the exchanges, even as the House GOP will also include tax credits for individual insurance.
“We’re just looking at the average premiums before accounting for any subsidies. So this isn’t necessarily taking what one person would pay now, what that same person would pay back then,” Cynthia Cox, an associate director at the Kaiser Family Foundation, told TPM.
While the HHS report shows that average monthly premiums in HealthCare.gov states are $476 a month, the average ACA consumer receiving subsidies only pays $106, according to Cox.
A previous HHS report during the Obama administration said that about 84 percent of consumers in the exchanges received advanceable tax credits for individual plans.
Those who aren’t eligible for subsidies and can’t afford exchange plans often shop for plans off the exchanges, Cox told TPM. There, they may find skimpier policies, but premiums are cheaper. Those consumers’ premiums are not taken account in the HHS’ analysis of the 2017 premium averages.
The 2013 numbers measured a very different group than the 2017 numbers do.
It would be a closer — though not perfect — comparison to compare the entire 2013 individual market to the entire 2017 individual market, both exchange and non-exchange plans. The HHS doesn’t do that, and instead looks only at the 2017 premiums within the HealthCare.gov exchanges, which makes up a portion of the total individual market.
People in the exchanges tend to be older and sicker than those in the individual market at large before the ACA. That is because insurers in the pre-ACA individual market were allowed to hike premiums or deny coverage entirely to people on the basis of pre-existing conditions. Insurers are now not allowed to deny coverage or raise premiums on people based on their health status. But covering those conditions is expensive, and expense is being spread across the entire pool.
“The main thing is they still had health status underwriting [in 2013], so people with pre-existing conditions could not have very well been covered by those plans,” Timothy Jost, a health law expert of Washington and Lee University, told TPM.
The plans offered in 2013 are very different than those being counted in 2017.
Premiums within the exchanges in 2017 are higher than those in the total 2013 individual market in part because the plans are more generous and comprehensive. The ACA included a number of insurance reforms such as the Essential Health Benefits, which mandated the 10 broad coverage areas insurers must offer. In 2013, plans did not have to offer all of these coverage areas. They could also impose annual limits on benefits, or even block certain types of coverage for those with pre-existing conditions.
“We know a number of them didn’t cover maternity, didn’t cover mental health or substance abuse, didn’t even cover prescription drugs,” Jost said.
The HHS report excludes state-based exchanges.
The HHS report only looked at the premiums in states that use the federally facilitated HealthCare.gov exchange, excluding the averages in the state-based exchanges where premiums tend to be cheaper, according Cox.
The people in state-based exchanges tend to have lower premiums in part because many of those states also expanded Medicaid. States without Medicaid expansion have more lower income people in their individual market, who in turn are more likely to have pre-existing conditions that drive up premiums
States in the South where people are also more likely to have pre-existing conditions that drive up premiums have also been more likely to be using the federal exchange.
“The combination of those two factors are why premiums are higher in HealthCare.gov states on average than the states that run their own exchanges, it’s not so much a function of the exchanges working better,” Cox said. “A lot of it is dependent on demographics.”
The HHS report does illuminate GOP’s approach in their Obamacare repeal effort.
What the HHS report does reflect is Republicans’ attitudes in replacing the Affordable Care Act, as we’ve seen previewed by the GOP House bill, the American Health Care Act.
“For the AHCA to be able to bring premiums back to pre-ACA levels, health plans would need to be able to exclude people with pre-existing conditions and also significantly cut benefits,” Cox said.
Jost pointed out that the HHS office that released this report also is responsible for policy recommendations and under Trump, is being led by a longtime Obamacare critic, Stephen Parente, a health economist from the University of Minnesota.
“Getting rid of the Essential Benefits and getting rid of the actuarial value requirements, allowing states to permit health status underwriting, brings us back to the good ole days of 2013 when coverage was so much cheaper,” Jost said. “Their hope is prices will go back down again if we can get rid of all these stupid Obamacare rules.”