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October 25, 2016

The 25% Obamacare Premium Increase Vastly Understates the Real Increase

 

The Obama administration has announced what everyone in the country except President Obama already knew: health insurance premiums are exploding. 

The Department of Health and Human Services (HHS) says that premiums for the Affordable Care Act’s benchmark Silver policy will increase an average of 25 percent in 2017. Many Americans will see a 50 percent increase, or more. And that’s on top of significant increases in previous years. 

But just last week Obama explained to the students at Miami Dade College that health insurance premiums are actually lower under Obamacare. “This law has actually slowed down the pace of health care inflation. So, every year premiums have gone up, but they’ve gone up the slowest in 50 years since Obamacare was passed.” 

That statement would be a good candidate for Politifact’s 2016 “Lie of the Year.” The president already won that award in 2013 for his “if you like your health care plan, you can keep it” claim.  

But what most of the news stories don’t mention is that premiums would be even higher had health insurers not taken numerous mostly unpopular steps to keep costs down. 

For example, prior to Obamacare, most health insurance provider networks included a pretty wide selection of doctors, hospitals and other health care facilities. And if you went outside the network insurance paid a lower percentage, but still paid something.  

Increasingly insurers are moving to “Exclusive Provider Networks” (EPO)—sometimes facetiously referred to as “Empty Provider Networks”—in which the insurer only pays if you stay in the network. If you go outside you’re on your own—which can be tough on people traveling and in emergencies. 

In addition, insurers are raising copays for prescription drugs, even charging a percentage for very expensive drugs—if they cover them at all. That’s a way both to hold down costs and discourage patients with expensive medical conditions—e.g., AIDS—from choosing that insurer. 

People are understandably complaining about these and several other coverage reductions, but without them health insurance under Obamacare would be even more expensive than it is. 

The president says not to worry, the large majority of people who buy coverage in the exchanges get taxpayer subsidies, which go up when premiums increase. Translation: If government (i.e., taxpayers) is paying for something, it doesn’t really cost anything.  

Actually, it means those who don’t get subsidies actually pay double: once for their own premiums and again for those who receive subsidies. 

The fact is that under Obamacare Americans are paying more and more for less and less. The system cannot be fixed, it must be fundamentally redesigned.


 

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