Remember how ObamaCare would drive the cost curve downward? Recall how premiums would get controlled by forcing everyone into purchasing comprehensive health-insurance policies and thus eliminating free riders on the system? As insurers begin preparing to set premium prices and deductibles for Year Four of ObamaCare, one major insurer finds that the risk pool looks a lot like Years One through Three of ObamaCare — sicker, costlier, and, well … riskier:
Consumers who signed up for Blue Cross Blue Shield health plans through the Affordable Care Act’s insurance marketplaces these last two years tended to be sicker and incurred greater medical costs than people with BCBS coverage through their jobs.
The enrollees in those individual health plans in 2014 and 2015 had higher rates of diabetes, depression and heart disease, according to a report released Wednesday by the Blue Cross Blue Shield Association.
Medical costs for individuals who obtained coverage through the ACA’s insurance exchanges were, on average, 22 percent higher than those with employer-based coverage in 2015, according to the association. Average monthly medical spending per member was $559 for individual enrollees in 2015, for example, versus $457 for group members.
So much for the universal mandate. As predicted, people are complying when it suits them, and it suits them when they get sick or injured. The reason for this is clear — ACA exchange insurance is only good for catastrophic events. Otherwise, the deductibles are so high — more than $5000 a year for bronze plans on average and still in four figures for silver plans — that most people won’t ever qualify for their insurance unless they get hospitalized. Those people are seeing the reward of compliance as far less than the cost of non-compliance and are staying out of the system altogether.
As a result, the forced entry of healthy subscribers hasn’t materialized to offset the high utilization costs of sicker subscribers accessing the system. Also, the curve of utilization doesn’t appear to be smoothing out much either. ObamaCare advocates acknowledged that utilization would spike briefly as those with pre-existing conditions finally gained coverage, but that the phenomenon would be short-lived. After three years, the spike shows no sign of receding, and insurers are now faced with consistently higher utilization rates than expected.
What does this all mean? It means that the rate hikes are not over. Some expected FY2016 to have the last significant rate hike in premiums, with subsequent rate adjustments more in line with annual pre-ACA increases. In most states, rates increased by double digits; in Minnesota, some qualifying plans increased premiums by 50% from the year before. The spikes in FY2017 may not reach that amplitude, but they’re not going to be simple inflation-indexed increases. And deductibles won’t be shrinking in the near future, either.