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U.S. House Speaker Paul Ryan has received a lot of criticism (and a False rating from us) for his claims that actuaries say Obamacare is in a "death spiral." But it’s far from his only criticism of the former president’s trademark health care law.
Ryan has repeatedly brought up rising premiums as well, notably in his Jan. 5, 2017 weekly briefing where he ran off a list of increases for 2017.
"This law is hurting people right now. I mean, look at these premium increases," the Janesville Republican said, then ticked off a series of states.
"This year Arizona, 116 percent increase in premiums. Tennessee, 63 percent increase in premiums. Oklahoma, 69 percent increase in premiums. Illinois, 43 percent increase in premiums. North Carolina, 40 percent increase in premiums. Nebraska, 51 percent. Pennsylvania, 53 percent. These aren’t statistics, these are real lives," he said. "These are real families facing huge premium increases."
Are the premium increases Ryan cited correct, "hurting people right now" and attributable to Obamacare?
Numbers are on the mark
The basic numbers are easy to confirm: Those increases are indeed accurate for 2017 compared to 2016 within the Obamacare marketplace. Arizona has by far the largest increase in the nation, and Oklahoma is second.
The states all are among the Top 10 in percentage increase over 2016, according to estimates the U.S. Department of Health and Human Services released in October 2016.
As such, they are not a representative sample of all 50 states, but Ryan never claimed they were. And they are the headlines in a clear national trend.
Premiums rose an average of 25 percent across the 39 states that use the HealthCare.gov marketplace. Only one state (Indiana) saw premiums drop in 2017.
The calculation is based on the average cost in each county for the second-lowest-cost silver level plan for a 27-year-old, a plan widely used as a benchmark to compare rates between years and geographic areas.
Premiums affect many people
Ryan’s description of the law as "hurting people right now" is a bit subjective, but it’s clear enough for us to examine since he later expanded on this by referencing "families facing huge premium increases."
Obamacare supporters often claim premium increases are irrelevant due to the subsidies built into Obamacare. Those subsidies cap premium prices at a certain percentage of income for anyone below 400% of the federal poverty level (that’s $48,240 in 2017 for a single person). For 2017, 81 percent of consumers enrolled in the marketplace through Dec. 24, 2016 were in line to receive a subsidy.
That means 19% of those insured will receive no subsidy and therefore bear the full weight of those premium increases (assuming they stay on the same plan). That’s more than 2 million people, based on the latest enrollment data.
Fair to attribute increase to Obamacare?
The final hurdle for Ryan’s claim is the matter of blame. He says the law itself is hurting people right now — in other words, that increases due to Obamacare go beyond the general trend of rising health care costs.
This year’s 25 percent increase is by far the largest since Obamacare began. Premiums rose around 7 percent in 2016 and 3 percent in 2015, based on the HHS analysis of the same benchmark plan.
For starters, that jump is far beyond what is expected industry wide. The National Business Group on Health estimates employees of the nation’s largest businesses — an indicator of overall health insurance costs — will see about a 5 percent premium increase in 2017, based on a survey of 425 large employers.
Obamacare premiums are rising far more in part because of several mechanisms built into the healthcare law that have ended or not worked as intended — reinsurance and risk corridors.
Both were set up as temporary measures from 2014 to 2016 to subsidize the marketplace, artificially keeping prices low.
Reinsurance was designed to reduce the incentive for insurers to charge higher premiums to higher-cost policyholders in the first years of Obamacare, which was accomplished by transferring funds to the plans for those policyholders.
Risk corridors were designed to transfer money from profitable insurers to those losing money on the ACA exchange, discourage insurers from setting high premiums due to the uncertainty of the new market.
They were originally pitched as a mechanism that would bring in money, then as one that would break even. But the latest data shows in 2015 claims from insurers for payment through the program outweighed the money paid in by $5.8 billion, so the expected funds weren’t available to redistribute.
Now that the programs have ended as designed, premiums are rising to more closely match what it actually costs insurers to offer plans in the marketplace.
This is by no means an exhaustive accounting of the factors driving 2017 premiums upward. Experts say general growth in health care costs still play a role, as do changes in who is signing up, provider networks and the small group market, among others.
Ryan said soaring Obamacare premiums are "hurting people right now," including one state with an increase of 116 percent.
The state-by-state increases he cited were correct based on the commonly used benchmark plan. The increases appear likely to affect several million people since about one-fifth of those enrolled in Obamacare aren’t eligible for subsidies.
And while we can’t exactly identify all the factors in the rising premiums, they are clearly going up more than non-Obamacare premiums due in part to how the system was set up.
The missing nuance in Ryan’s claim is that it doesn’t acknowledge the millions of people who wouldn’t have any insurance without Obamacare and would presumably end up hurting even more. And we’ll note some level of financial hurt would exist regardless due to ever-rising cost of health care.
For a statement that is accurate but needs clarification or additional information, our rating is Mostly True.
C-SPAN, House Speaker Weekly Briefing (6:30 mark), Jan. 5, 2017
Center for Medicare and Medicaid Services, Health insurance marketplaces 2017 open enrollment period: January enrollment report, Jan. 10, 2017
Email exchange with Tasha Bradley, spokeswoman, U.S. Department of Health and Human Services, Jan. 24, 2017
U.S. Department of Health and Human Services, Health Plan Choice and Premiums in The 2017 Health Insurance Marketplace (Page 20), Oct. 24, 2016
U.S. Department of Health and Human Services, Health Plan Choice and Premiums in The 2016 Health Insurance Marketplace (Page 20), Oct. 30, 2015
American Academy of Actuaries, Drivers of 2017 Health Insurance Premium Changes, June 2016
Interview with David Cutler, professor at Harvard University, Jan. 27, 2017
Email exchange with Jeff Anderson, senior fellow at the Hudson Institute, Jan. 27, 2017
Kaiser Family Foundation, Explaining Health Care Reform, Aug. 17, 2016
National Business Group on Health, Large U.S. Employers Project Health Benefit Cost Increases to Hold Steady at 6% in 2017, National Business Group on Health Survey Finds, Aug. 9, 2016
U.S. Department of Health and Human Services, Risk Corridors Payment and Charge Amounts for the 2015 Benefit Year, Nov. 18, 2016
Congressional Budget Office, Updated Estimates of the Effects of the Insurance Coverage Provisions of the Affordable Care Act, April 2014
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