Mid-Atlantic Insurer: Obamacare Facing Death Spiral, 29 to 50 Percent Premium Hikes Needed in 2018

Guy Benson
|
Posted: May 08, 2017 3:30 PM
Mid-Atlantic Insurer: Obamacare Facing Death Spiral, 29 to 50 Percent Premium Hikes Needed in 2018

House Speaker Paul Ryan appeared on ABC News' This Week yesterday to defend the American Health Care Act against various criticisms, many of them from the Left.  We'll get to his exchange with George Stephanopolous shortly, but one of the messages that he relentlessly drove home is that Obamacare's status quo is failing and falling apart. We've seen this in the form of rising rates and insurance carriers pulling out of markets. In the last few weeks alone, a number of major national and statewide insurers have announced or telegraphed their intention to abandon Obamacare exchanges in 2018, which will leave consumers with fewer (and in many cases just one or zero) choices.  And as rates keep rising, additional healthier and younger people will flee the marketplace, further exacerbating the adverse selection death spiral. Ryan hammered this reality over and over again, referring to the GOP's 'repeal and replace' efforts as a "rescue mission" for a disintegrating law. Almost on cue, another significant regional carrier has come forward with a very bleak assessment of the existing law's future. The Washington Post reports:

The head of the largest insurer in the Mid-Atlantic region warned Thursday that the Affordable Care Act marketplaces were in the early stages of a death spiral, a statement that came as the company announced its request for massive, double-digit premium increases for next year. Projecting that by year's end the company will have lost a total of $600 million since it started selling plans in the marketplaces four years ago, CareFirst Blue Cross Blue Shield is requesting a greater than 50 percent rate increase in Maryland, a 35 percent increase in northern Virginia and a 29 percent increase in D.C. “What we’re seeing is greater sickness levels. The pool of beneficiaries is becoming sicker, in part because healthier people are not coming in at the same level we hoped,” said Chet Burrell, chief executive of CareFirst, which insures about 215,000 people through the marketplaces set up by the Affordable Care Act in all three states. Burrell said he was worried that the market was in the early stages of a death spiral, in which sick people who need insurance stay in the pool but healthier people drop out, causing insurers to raise rates — driving even more healthy people out of the market.

In other words, Republican rhetoric matches reality. Companies are running the numbers and fretting about a developing death spiral, out loud, for all to see. That's what the numbers are telling actuaries and accountants, no matter how hard left-leaning "fact checkers" try to pretend otherwise. In this case, a big player in the mid-Atlantic region's individual market says that the eroding risk pools will require another bruising round of double-digit premium increases, ranging from 29 to 50 percent for consumers living in the Washington, DC area. That's on top of large out-of-pocket deductibles and other costs. This is an unsustainable situation that is getting worse. The 2018 numbers are going to look ugly all across the country. That's why Republicans are stepping in: To fix the mess Democrats left them, as they promised the American people they would do, en route to three national election victories.  Here's Ryan doing battle with Stephanopolous on a host of specifics pertaining to the AHCA:


Ryan's answers are mostly compelling and persuasive, although I didn't find him terribly convincing when he said that because last-minute changes to the legislation were relatively minor, a new Congressional Budget Office score wasn't necessary prior to holding a vote.  What was interesting to me was Ryan's concession that the Senate will need to fix a flaw in the House bill that I flagged on the day it passed -- namely, that older middle- and working-class Americans on the individual market could get priced out of affordable care.  As currently structured, the tax credits simply aren't generous enough for people approaching retirement, but who aren't yet eligible for Medicare.  Ryan indicated that the Senate will increase the size of tax credits for this age bracket.  I'll have more analysis of specific policy questions as the week unfolds, as we continue to explore potential solutions to the AHCA's shortcomings.  We'll also keep beating back outrageous lies and dishonest scare tactics from those who'd prefer to twiddle their thumbs as the status quo they support collapses on people. I'll leave you with this, out of Connecticut: