What Obama points to with justifiable pride are good prices for good coverage. But there lies the second potential pitfall, with even greater political peril for the ACA. Comparing prices in 2014 to those in 2013 is an “apples to oranges” exercise because the health plans on the exchange are new, and many of them differ considerably from older ones. The president is correct in pointing to the substandard quality of much of the individual coverage that is being phased out. We did that in Massachusetts as well, replacing an estimated 150,000 individual and group insurance policies that lacked prescription drug coverage and other basic elements.
Because the exchange makes it easy for consumers to compare premiums and other features of one health plan against those of another, by next autumn they will be able to see premium increases, state by state and congressional district by district. The insurance shopping season is scheduled to open on Oct. 15, 2014 — 20 days before the midterm elections.
Why is this an immediate challenge? Because the hundreds of insurers offering plans on the federal exchange will begin pricing for 2015 in just a few months. Their chief financial officers should be sweating bullets about the obstacles that HealthCare.gov’s glitches have put in the path of enrollees. Fortunately, October was an early shopping month, mainly for browsing and for those who are sick and highly motivated to get coverage. It wasn’t an important month for enrolling the “young invincibles” — uninsured young people who don’t think they need health care — who will subsidize older, sicker enrollees. But the longer HealthCare.gov remains clogged, the more young invincibles will be discouraged from joining. If that happens, enrollment in the 36 states using the federal exchange will resemble small, high-risk insurance pools composed mainly of the sick — potentially causing premiums to soar in 2015.
Insurers must set rates for 2015 in some states by the end of February, and in most states before June. They can’t raise their rates on plans in the federal exchange now; their prices are locked in for next year. Nor can most carriers recoup any 2014 losses by raising premiums for 2015: Unless most competitors do the same, hiking premiums will chase away any healthy customers they have. But that is the imminent danger — a general rise in rates among health plans on the federal exchange.