Thanks to the Affordable Care Act, more Americans have health insurance today than ever before – 20 million more than in 2010. The news this week that Obamacare insurance premiums are going up an average 25% may seem worrisome, but many insurers had initially underestimated costs and set rates lower than the Congressional Budget Office had projected. We’re now seeing a correction.
That said, the ACA hasn’t been an unqualified success. Many poor and middle-class Americans still don’t have access to affordable health insurance. The Obamacare experiment may finally prove that there’s only so much market-based solutions can do.
One of the most popular measures under the ACA was to bar insurance companies from denying someone coverage due to a pre-existing health condition, such as pregnancy, asthma, diabetes, heart disease, cancer or depression. More than half of Americans say that they or someone in their household has a pre-existing condition. Some of these folks get insurance coverage through their job. Others are poor or disabled or old enough to qualify for Medicaid or Medicare. But before the ACA, the rest faced sky-high premiums if they could get insurance at all.
Because insurers could deny coverage to people with pre-existing conditions, they could sell insurance to the rest of us relatively cheaply. That’s because they were selling insurance to healthy people who wouldn’t use a lot of health services. Insurers underestimated just how sick those signing up for the Obamacare plans would be, and that’s a key reason costs and premiums are going up now. And even though premiums on Obamacare plans are going up, it’s not as much as you’d think. Employer-sponsored health insurance is still more expensive.
But just because Obamacare insurance premiums are going up doesn’t mean you’ll pay more. Eight out of 10 Americans buying insurance on Healthcare.gov will still be able to get coverage for under $100 per month. That’s because Americans who make between 100% and 400% of the Federal Poverty Level (between $24,300 and $97,200 for a family of four in 2016) – 85% of those buying an Obamacare plan – are eligible for a tax credit. These tax credits go up if insurance premiums go up, so your out-of-pocket costs stay about the same.
But there are some clear losers under Obamacare. You will face a big premium hike if you buy your own insurance and make too much to be eligible for a tax credit (mostly small business owners and their employees) or if you’re eligible for a tax credit but choose to shop for insurance outside the Obamacare marketplace (an estimated 2.5 million people). And if you’re one of the 4 million poor Americans living in the 19 states opting against Medicaid expansion, you’re out of luck.
Most concede Hillary Clinton will probably win the election next month. She’ll have a narrow window to make changes to the ACA before gridlock returns. While Democrats may take control of the Senate, the scales will probably tip back the other way in the 2018 midterm elections. Democratic control of the House remains a long shot. This is the time to think and act big.
Clinton has come out in favor of a public option: a Medicare-like plan that would compete with private plans on the health insurance marketplace. With lower administrative costs and greater bargaining power to negotiate more favorable rates with healthcare providers, a public option would have a competitive advantage over private Obamacare plans and would probably prove cheaper. Meanwhile, premiums for private plans will probably keep going up as big insurance companies get bigger by acquiring smaller ones and there’s less competition and fewer choices.
If Clinton wants to close the gap and help the Obamacare losers, she’ll have to think more boldly. She might consider expanding tax credits up the economic ladder and offering vouchers to the poor living in states that didn’t expand Medicaid so they too can buy Obamacare plans. Obamacare showed us that we can insure more Americans. How we treat our sick and our poor is a choice we make as a nation. Done right, Clintoncare could eventually pave the way for health insurance for all.
