A growing number of health care experts disagree with the Trump administration that the Health Insurance Marketplace is failing. Here are four claims it has used in support of repealing the Affordable Care Act (ACA), and the facts that refute these claims. While local market characteristics vary, these data—including new analyses on 2017 Marketplace performance—paint a different picture than is presented by the Trump administration.
The Claim: Insurance companies are losing money in the failed Marketplace.
- “Obamacare marketplaces just had their most profitable first quarter ever.” (Washington Post)
- In 2016, individual market insurers substantially narrowed the gap between premiums and costs. And a new government report showed that the risk pool improved from 2015 to 2016. Data analyzed by the Kaiser Family Foundation from the first quarter of 2017 show that gross margins per enrollee are twice as high now as they were before the implementation of the major Affordable Care Act policies (see Figure 1). In fact, the average medical loss ratio (share of premiums spent on health care and quality) is lower than before the ACA was implemented (75 percent compared to 79 percent for the first quarter in 2017 compared to 2011). This is the opposite of the Marketplace “exploding.”
The Claim: Enrollment is plummeting due to unaffordable Marketplace premiums.
- “Obamacare signups down 500,000 from last year, but premiums up by just $1.” (USA Today)
- While 2017 enrollment declined by 4 percent compared to 2016, the Trump administration’s sudden disruption of marketing during open enrollment rather than premium increases could have caused this drop. The vast majority of those who signed up for 2017 Marketplace coverage qualified for premium tax credits. Taking those tax credits into account, the average monthly premiums—according to a report by the Trump administration—did not increase between 2016 and 2017 (see Figure 2). The increase was only a $1 for those choosing a silver plan. At the end of Open Enrollment this year, 8.7 million Marketplace enrollees were receiving premium tax credit, protecting them from any large rate increase. Only about 1 million of the 1.6 million not receiving a tax credit live in states where premiums increased by more than 10 percent for 2017. These enrollees represent less than 1 percent of non-elderly people with private health insurance in the United States.
The Claim: Next year, premiums will skyrocket and insurers will drop out of the Marketplace because the law is failing.
- “Health insurers plan big Obamacare rate hikes—and they blame Trump.” (LA Times)
- Insurers and insurance commissioners alike blame Republicans—not ObamaCare—for uncertainty leading to higher premium and lower participation in 2018. For example:
CEO Blue Cross Blue Shield of North Carolina, May 26, 2017: “The failure of the administration and the House to bring certainty and clarity by funding CSRs has caused our company to file a 22.9 percent premium increase, rather than one that is materially lower.”
Insurance Commissioner, Pennsylvania, June 1, 2017: “The absence of certainty regarding market parameters, and in particular those with direct financial consequence, magnify the risks of market participation in a way that issuers and regulators cannot ignore.”
Insurance Commissioner, Tennessee, May 12, 2017: “It’s that instability, that uncertainty, the insurers hate the most. They are going to price for that.”
The Claim: The Senate bill will save the Marketplace.
- “How the Senate bill could send the health insurance market into a death spiral.” (Washington Post)
- Perhaps the biggest myth of all is that the Senate bill would stabilize the Marketplace. The Congressional Budget Office (CBO) projects that coverage would go down and premiums would go up next year under the legislation (See Figure 4). And while premiums would go down in 2020, cost sharing would go up and instability would increase. Additionally, CBO states, “…because of this legislation, at least for some of the years after 2019—no insurers would participate in the nongroup market or insurance would be offered only with very high premiums. Some sparsely populated areas might have no nongroup insurance offered because the reductions in subsidies would lead fewer people to decide to purchase insurance—and markets with few purchasers are less profitable for insurers.” On a comparable basis, premiums in 2026 would be 9 percent higher under the Senate bill.