Obamacare exchange customers set for significant premium spikes, CBO predicts
By Stephen Dinan - The Washington Times - Monday, March 9, 2015
Obamacare exchange customers are about to see spikes in their premiums, the Congressional Budget Office predicted Monday, saying insurers that offer plans are facing twin pressures from the government and the marketplace that will mean hikes of more than 8 percent a year through 2018.
Now in the second year of full operation, the exchanges are critical to the success of the law. The government is using tax subsidies to attract more customers to help offset costs for the rest of the system.
Nearly 11.7 million Americans bought plans on the exchange in the second enrollment period, Health and Human Services Secretary Sylvia Mathews Burwell announced Monday afternoon, hours after the CBO’s analysis was released.
The CBO said premiums for the key “benchmark” exchange plans will rise an average of 8.5 percent per year from 2016 to 2018, faster than the rest of the health care market.
The budget analysts said part of the reason is that the plans offered now are narrower than private plans and reimburse providers at lower rates. They said both trends probably will change, forcing insurers to raise premiums.
Overall, the CBO said, health care costs for the government and for private consumers are lower than expected just a few years ago. That means Obamacare is less expensive than predicted when the Affordable Care Act was enacted in 2010, though it’s covering fewer Americans than President Obama hoped.
Ms. Burwell said the law is working as intended, and she urged the Supreme Court not to invalidate the way the administration pays subsidies. Cutting off the tax payments would harm millions of Americans who “need, want and like” the plans they’ve bought, she said.
“The simple truth is that millions of Americans in all 50 states rely on the Affordable Care Act for tax credits to buy insurance,” she said.
The justices last week heard oral arguments in the case of King v. Burwell.Plaintiffs said the administration is breaking the law by paying the subsidies to customers in states that rely on the federal HealthCare.gov exchange. The law says subsidies can be paid to customers in exchanges “established by the state.”
If the court rules against the administration, customers in two-thirds of the states would be cut off from subsidies, which would create a crisis for Congress and the White House.
Republican lawmakers are hoping to fill the void with a patchwork of proposals that keep health care coverage and financial assistance in place for Americans affected by the ruling, but only for a limited time as they forge a replacement to Obamacare ahead of a presidential election year.
Justice Samuel A. Alito Jr., a conservative who appeared ready to side with the plaintiffs, suggested that the Supreme Court could postpone the brunt of its ruling so subsidies are not cut off until the end of the year.
The nonpartisan Congressional Research Service said Monday that such a stay would be possible, as “Congress has specified that the court has the authority to fashion remedies that are ‘just under the circumstances.’”
But researchers also said a stay of the Obamacare ruling might not apply in this case because it is not clear whether lawmakers authorized the subsidies.
Michael Cannon, a health care policy director at the libertarian Cato Institute and architect of the legal theory behind the King challenge, said it would be strange for the court to declare the federal exchange subsidies illegal only to keep them alive several more months.
“That would be awkward, to say the least,” he said.
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