High tax­payer sub­si­dies keep Oba­macare mar­kets sta­ble

The Washington Times Weekly - - Politics - BY TOM HOW­ELL JR.

Far from fail­ing, Oba­macare’s ex­changes are sta­ble, the Con­gres­sional Bud­get Of­fice says — but only be­cause, as the mar­kets strug­gle, tax­pay­ers pay ever-higher sub­si­dies to en­cour­age en­roll­ment.

As pre­mi­ums go up, so does the amount the gov­ern­ment pays to help peo­ple buy cov­er­age. That, com­bined with the man­date re­quir­ing Amer­i­cans to have in­sur­ance, should “cause suf­fi­cient de­mand for in­sur­ance by enough peo­ple” to keep the mar­kets run­ning at a sta­ble clip, the CBO said in a closely watched re­port last month.

Democrats in­tent on sal­vaging Oba­macare say that’s good news be­cause the law is work­ing as it should.

But the worse the mar­kets, the more the gov­ern­ment will have to do to bol­ster them — and the more tax­pay­ers will have to fund.

“Ab­so­lutely there is a cost shift that’s go­ing on here, and that shift is pri­mar­ily to the tax­payer,” said Lan­hee Chen, a fel­low at Stan­ford Univer­sity’s Hoover In­sti­tu­tion who ad­vised 2012 Repub­li­can pres­i­den­tial nom­i­nee Mitt Rom­ney on health care.

The ac­tual num­bers are startling: The av­er­age monthly pay­ment this year is $371, or 28 per­cent higher than the av­er­age pay­ment a year ago.

The Amer­i­can Ac­tion Fo­rum, a con­ser­va­tive think tank that crunched gov­ern­ment data, es­ti­mated that the sub­si­dies rose from $18.6 bil­lion in Oba­macare’s first full year in 2014 to $30.4 bil­lion last year.

The fo­rum projects $38.5 bil­lion in spend­ing for 2017, even though en­roll­ment ap­pears to have re­mained static.

“In broad con­tours, the Af­ford­able Care Act cre­ated a new en­ti­tle­ment and ex­panded an old one at a time we al­ready pro­jected large deficits,” said fo­rum Pres­i­dent Dou­glas Holtz-Eakin, a former CBO di­rec­tor, re­fer­ring to the law’s sub­si­dies and vast ex­pan­sion of Med­i­caid. “That strikes me as a big is­sue. And now it turns out it’s more ex­pen­sive than an­tic­i­pated.”

Soar­ing pre­mi­ums cre­ated neg­a­tive head­lines for Democrats dur­ing the home stretch of the po­lit­i­cal cam­paigns last year and are fu­el­ing Pres­i­dent Trump’s push to scrap the law with the Repub­li­can ma­jor­ity in Congress.

Rate in­creases also scared off peo­ple who want to buy in­sur­ance on their own but earn too much to get sub­si­dies, mak­ing it harder to achieve the kind of bal­anced risk pool that would bring down rates.

“In my mind, at least, what we’ve cre­ated [un­der Oba­macare] is pri­mar­ily a ve­hi­cle to ad­min­is­ter sub­si­dized cov­er­age. It’s not a mar­ket­place at all,” Mr. Chen said.

Even those who re­ceive gov­ern­ment help haven’t used the por­tals in great enough num­bers.

Robert Laszewski, pres­i­dent of Health Pol­icy and Strat­egy As­so­ci­ates, said only about 4 out of ev­ery 10 Amer­i­cans el­i­gi­ble for sub­si­dies have signed up. Ac­tu­ar­ies say about three-quar­ters should sign up to achieve a bal­anced mar­ket.

As it stands, en­roll­ment is stag­nat­ing, with its first year-over-year de­cline and ef­fec­tu­ated en­roll­ment at 10.3 mil­lion as of March 15.

“Ideally, we need about 18 mil­lion to be sure of a bal­anced risk pool,” Mr. Laszewski said.

The up­side to the poor per­for­mance is that Oba­macare is cost­ing less over­all than it would oth­er­wise. While the per-per­son costs are higher, the Amer­i­can Ac­tion Fo­rum says, the pro­gram’s cost is $33 bil­lion less than pro­jected be­cause of lower en­roll­ment.

Democrats say Mr. Trump is mak­ing a dif­fi­cult sit­u­a­tion worse by re­fus­ing to com­mit to cost-shar­ing pay­ments that re­im­burse in­sur­ers for pick­ing up low-in­come cus­tomers’ costs. As a re­sult, in­sur­ers are ask­ing for higher rates than they oth­er­wise would.

Con­gres­sional Repub­li­cans and the Trump ad­min­is­tra­tion’s Health and Hu­man Ser­vices Depart­ment con­tend that the law is to blame for ris­ing rates — Blue Cross Blue Shield re­quested a 26 per­cent spike in Ge­or­gia — and must be re­pealed and re­placed with more af­ford­able op­tions that drive down pre­mi­ums and spend­ing.

“Ris­ing costs and fewer choices — that is the legacy of Oba­macare. Now is the time to ad­vance real health care re­form that em­pow­ers peo­ple to choose a health care plan that meets their needs with­out break­ing their bud­gets,” said HHS spokes­woman Alleigh Marre.

House Repub­li­cans passed a re­peal plan that pegged tax cred­its to age so gov­ern­ment costs wouldn’t rise with pre­mi­ums, yet Se­nate Repub­li­cans wor­ried that those cred­its wouldn’t be gen­er­ous enough for lower-in­come and older peo­ple.

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