Health Insurance

Obamacare report card claims next year's higher premiums are 'one-time adjustment'

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Your move, Mr. Trump.

The Obama administration on Tuesday released a wide-ranging, positive report card on the Affordable Care Act, describing how Obamacare has driven down the rate of people without health insurance "to its lowest level in history," increased financial security and access for consumers who seek medical care, and bent the cost-curve of health-care spending.

The Council of Economic Advisers report also argues that the big price hikes in Obamacare premiums for plans that go into effect in 2017 "are a one-time pricing correction, not a harbinger of future market instability," and that the premium increases next year do not threaten the overall stability of the individual health-plan market.

And it says that the average premium for people who have health insurance through a job — which is most Americans — is $3,600 lower this year than it would have been if increases in premiums had matched what was seen in the decade before the ACA was passed into law.

That rosy picture painted by the report from the Council of Economic Advisers is sure to be cited repeatedly by defenders of Obamacare in 2017 as President-elect Donald Trump and a Republican Congress move ahead with their stated plans to both repeal the controversial law and replace it with other legislation.

The 100-page report's large amounts of data and charts are likely to be used by Obamacare advocates as benchmarks to point toward when comparing the ACA to any replacement plan, proposed or passed into law.

"As detailed in the report, the Affordable Care Act (ACA) and other administration actions have driven historic progress in filling in the gaps in the U.S. health insurance system and building a health-care delivery system that provides high-quality care at an affordable cost," wrote CEA Chairman Jason Furman and Matt Fiedler, chief economist of the council, in a summary of the report.

"Tens of millions of Americans have coverage or significantly better coverage because of reforms enacted under this administration," they wrote. "Because of the ACA, an additional 20 million adults now have health insurance. On top of that, more than 3 million children have gained coverage since 2008 due largely to the ACA's reforms and improvements to the Children's Health Insurance Program enacted in February 2009."

The report lays out what it calls 10 new pieces of analysis to highlight progress "in reforming the health-care system."

Topping them is the finding that the uninsured rate has declined in all income groups since the ACA began taking full effect in 2013.

While people with lower and moderate incomes saw coverage gains from expansions in Medicaid and the availability of subsidies to buy Obamacare plans, the uninsured rate among people who earned too much to qualify for either of those programs still fell by 31 percent, the CEA pointed out. That decline among higher earners "shows that the combination of the law's new consumer protections" and the legal requirement that most Americans have insurance or pay a fine "have been effective in increasing coverage," Furman and Fiedler wrote.

And coverage gains were particularly large among young adults, who saw their uninsured rate fall by more than half since 2010.

The report also cites the fact that the share of people reporting that they did not get medical care because of cost has dropped by one-third since 2010, with "particularly rapid declines since the ACA's main coverage provisions took effect in 2014."

And the amount of uncompensated care provided by hospitals — care for people who lack health coverage — "has fallen by more than a quarter as a share of total hospital costs from 2013 to 2015," according to the report. That drop translated into a reduction in uncompensated care costs of $10.4 billion last year. Hospitals in states that expanded Medicaid saw much bigger decreases in their uncompensated care rates.

The report presents evidence that the large average price increases for Obamacare plans that go into effect next month "are one-time adjustments" to accommodate the phasing out of an ACA program designed to limit insurers' risks of selling individual health plans. The price hikes are "not a reflection of troubling trends in the underlying individual market claims costs," Furman and Fiedler wrote.

The duo pointed out that data shows that the largest premium increases since 2014 have occurred in areas of the country that had the lowest premiums in 2014, which is consistent with the argument that some big premium hikes recently reflect initial underpricing of plans.

The report also notes that national spending on health is now projected to be $2.6 trillion lower over the first 10 years of Obamacare than was expected prior to the ACA, despite the fact that many million more people have insurance now.

"In 2019 alone, national health expenditures are projected to be 13 percent ... lower than pre-ACA projections," Furman and Fielder wrote.

They noted that slower growth in spending has been seen across all three of health-care's largest spending catergories: hospital services, physician services and prescription drugs.

As a result of that growth slowdown, the typical person enrolled in Medicare, the federally run health coverage program for primarily senior citizens, will incur $700 less in premiums and out-of-pocket costs in 2016, according to the report.

Finally, the report notes that new data shows that there have been about 125,000 avoided deaths in hospitals since 2010 as a result of improvements to quality of care in hospitals, which are partly due to ACA payment reforms and other initiatives.