A Premium Mess In The Lone Star State

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Insurance Premiums Are On The Rise

COMMENTARY—Usually it’s a good thing that everything’s bigger in Texas, but that isn’t true when it comes to health-insurance premiums for Obamacare. Recent federal data show that Texas’ largest insurer on the ObamaCare exchanges is seeking average premium increases of nearly 60 percent for 2017—among the highest hikes in the entire country.

As a result, at least 600,000 policyholders with Blue Cross Blue Shield may quickly find their insurance coverage is unaffordable. Some may already feel that way: Texans with individual Obamacare exchange policies already saw premiums rise by an average of 14 percent this year.

Although state regulators still have to approve the latest request, many major Texan insurers are requesting double-digit premium hikes, and it is all but certain that Texans will feel even more financial pain next year.

This alone shows that ObamaCare continues to harm the very people it was supposed to help. As further proof, premiums are increasing even though health insurers receive billions of dollars distributed by the federal government to try to keep premium hikes low.In other words, ObamaCare is so broken that even handouts can’t hide the fact.

These handouts have received little attention until now. ObamaCare was essentially designed as one big special-interest giveaway to health insurers, which is why they lobbied so heavily for it. Not only does the law force every American to purchase their products—the so-called “individual mandate”—but it also pads insurers’ bottom lines through a variety of direct subsidies designed to hide the true cost of premiums.

Among them are three programs called risk corridors, reinsurance, and risk adjustment. Risk corridors and reinsurance pay insurers for taking on patients with high costs. Risk adjustment, meanwhile, redistributes funds from plans with lower-cost enrollees—healthier, younger individuals—to higher-cost ones.

Yet even that wasn’t enough to make ObamaCare plans affordable. Despite soaking up billions of dollars, the law is still forcing insurers to boost their premiums or withdraw from the market entirely. And with risk corridors and reinsurance expiring next year, taxpayers will start to see just how unaffordable their insurance truly is.

Don’t take my word for it. UnitedHealthcare, which this year covered 80 percent of enrollees on Texas’s Obamacare exchange, will be departing the market altogether in 2017. And many looking for new insurance plans already found their choices severely limited when Blue Cross Blue Shield of Texas ceased offering PPO plans on the exchange at the start of the year.

And then there’s the premium rate hikes. The reason for these is the “magnitude of losses” that Blue Cross Blue Shield’s exchange plans have faced over the last two years. In other words, even with reinsurance and risk corridors, the costs of providing coverage are too high.

The federal government is trying to urge Texans and others facing potentially skyrocketing premiums not to be alarmed. “Consumers will have the final word when they vote with their feet during open enrollment,” the federal Department of Health and Human Services noted.

That’s definitely true, but not in the way the federal government intended. One Texas insurance broker warns the premium increases will be “a very big disruptor of the market,” falling especially hard on rural communities. Since consumer subsidies can’t possibly keep up with the premium hikes, many people will be encouraged to forgo insurance entirely. The fines required to be paid by those without coverage will often end up cheaper than ever-more-pricey premiums.

The latest announcement from Blue Cross Blue Shield makes this outcome all the more likely. It’s telling that not even bailouts could keep the company from requesting a staggering 60 percent average premium hike. Yet even before that, Texans were already hurting from the constant premium price spikes under ObamaCare. Just this once, it’d be nice if everything wasn’t bigger in the Lone Star State.

By Jerome Greener
Special to Focus Daily News
Jerome Greener is the Texas state Director of Americans for Prosperity.

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