By Bill Hammond
Late last month, the official White House blog inaccurately declared, “One in Five New Yorkers Can Expect Double Digit Rate Hikes,” and misleadingly pointed the blame at Obamacare.
Since the post included a quote from me, I’d like to set the record straight.
The confusion started with the opening paragraph: “As Obamacare continues to collapse, the New York Post reports today that one in five New Yorkers can expect double-digit rate hikes. That’s 3.6 million people.”
“Reports today” is the first error. The Post story was published May 15, five weeks before the blog entry on June 21.
A second error is the assertion that double-digit rate hikes would affect “one in five New Yorkers” or “3.6 million people.” In fact, that’s the overall enrollment on New York’s Obamacare exchange – 97 percent of which is Medicaid and other government-funded health plans. Few people in those programs pay any premium at all.
The premium hikes in question affect all small-group and nongroup health policies in New York State, most of which are sold outside the Obamacare exchange. The number of consumers involved is 1.4 million – about 7 percent of state residents, not one in five.
The Post’s story was anticipating a future event – the publication of health plans’ proposed rates for 2018. My quote was a prediction that rates would increase by double digits, which turned out to be true: The proposed increases, announced June 7, averaged 17 percent for individuals and 12 percent for small groups.
A third issue is the White House’s implication that spiking premiums are primarily due to Obamacare. In New York, the truth is more complicated than that.
Before the Affordable Care Act, the state’s non-group insurance market was in a “death spiral” of soaring costs and plunging enrollment – the result of ill-conceived state laws dating from the 1990s. The ACA’s mandates and subsidies halted that spiral, and prices dropped by half or more – the opposite of what happened in most states. Even with this year’s hikes, New York’s individual premiums will be lower than in 2013.
Yes, Obamacare did play a role in this year’s hikes. An ACA tax that Congress had suspended is due to come back in 2018, adding a point or two to premiums. An ACA program called risk adjustment forced some plans – including BlueCross and BlueShield of Western New York and Independent Health – to raise prices while allowing other plans to lower them.
Otherwise, New York’s insurers mostly blamed premium increases on the growing cost of medical care, along with state policies that had nothing to do with Washington.
This is not to deny that Obamacare is in trouble.
In states not saddled with New York’s regulatory structure, the law is driving higher costs for many Americans. Meanwhile, insurers continue quitting the program, unable to break even despite the high premiums.
Any hope of fixing the law will require a clear-eyed recognition of what’s wrong and an honest discussion of solutions. The last thing we need is more misinformation.
Bill Hammond is director of health policy for the Empire Center in Albany.