Reports that benchmark health insurance premiums will increase by an average of 25 percent from 2016 to 2017 for plans purchased on Healthcare.gov marketplace exchanges have prompted right-wing media outlets to claim the price hike is proof of “the collapse” of the Affordable Care Act (ACA) and evidence of a so-called Obamacare “death spiral.” In reality, the majority of individual insurance customers will be insulated from cost increases due to proportional increases in the health care subsidies, and these premium increases are still in line with anticipated health care costs initially predicted by the Congressional Budget Office (CBO).
White House Confirms 25 Percent Increase In ACA Insurance Marketplace Premiums in 2017
Reuters: Benchmark 2017 Marketplace Premiums Will Rise 25 Percent. Reuters reported that the Department of Health and Human Services (HHS) confirmed “the average premium for benchmark 2017 Obamacare insurance plans sold on Healthcare.gov rose 25 percent compared with 2016” in the 39 states that rely on the federal online insurance marketplace. The article explained that the increase for next year “comes after two years of very low increases” and noted that “the government provides income-based subsidies to about 85 percent of people enrolled, and those credits will increase with the higher premiums.” From the October 24 article:
The average premium for benchmark 2017 Obamacare insurance plans sold on Healthcare.gov rose 25 percent compared with 2016, the U.S. government said on Monday, the biggest increase since the insurance first went on sale in 2013 for the following year.
The average monthly premium for the benchmark plan is rising to $302 from $242 in 2016, the Department of Health and Human Services said. The agency attributed the large increase to insurers adjusting their premiums to reflect two years of cost data that became available.
The government provides income-based subsidies to about 85 percent of people enrolled, and those credits will increase with the higher premiums. It said 72 percent of consumers on HealthCare.gov will find plans with a premium of less than $75 per month.
The government agency said the 2017 premium increase comes after two years of very low increases in the marketplace for the second-lowest cost “silver” plan, the benchmark plan used to calculate cost-sharing subsidies. [Reuters, 10/24/16]
Premium Increases Are Almost Entirely Covered By Obamacare Subsidies And Are In Line With Prior Cost Projections
NY Times: “Customers Will Be Insulated From The Full Increases” And “Larger Premium Increases For 2017 Are Not A Surprise.” The New York Times' Margot Sanger-Katz explained the effect of 2017 premium hikes, noting that “most current customers will be insulated from the full increases” because “the law offers sliding-scale subsidies to people earning less than 400 percent of the federal poverty level.” She also emphasized that “the larger premium increases for 2017 are not a surprise” because “insurers with low premiums in the past have found that their prices weren’t high enough to cover their costs.” She quoted Cynthia Cox, associate director at the Kaiser Family Foundation, who said that “the factors that are driving premiums to increase in 2017 are one-time factors.” From the September 1 article:
Most current customers will be insulated from the full increases. To help people afford insurance, the law offers sliding-scale subsidies to people earning less than 400 percent of the federal poverty level, which at $11,880 for a single person means just under $48,000 to qualify. The analysis suggests that most people with a subsidy will see smaller price increases if they switch to the lowest-cost plan. But people earning higher incomes, who pay the full cost of their insurance, will face bigger price increases than before. So will the federal government, which will now pay more in subsidies for everyone else.
The larger premium increases for 2017 are not a surprise. Several predictable factors help explain them. Two government programs that helped insulate the insurance companies from big losses expire at the end of this year. And many insurers with low premiums in the past have found that their prices weren’t high enough to cover their costs. Unexpected losses in this market have led some insurance companies to go out of business, and others to leave the markets voluntarily.[The New York Times, 9/1/16]
NPR: Obamacare “Tax Credits Track With The Increases In Premiums.” NPR reported that “the cost of health insurance under the Affordable Care Act is expected to rise an average of 22 percent” nationwide in all 50 states plus the District of Columbia and outlying territories, but noted that “federal subsidies will also rise, meaning that few people are likely to have to pay the full cost after the rate increases to get insurance coverage.” The article cited Kevin Griffis, assistant secretary for public affairs at the Department of Health and Human Services (HHS), who said enrollees “will ultimately be surprised by the affordability of the premiums, because the tax credits track with the increases in premiums.” From the October 24 article:
The cost of health insurance under the Affordable Care Act is expected to rise an average of 22 percent in 2017, according to information released by the Obama administration Monday afternoon.
Still, federal subsidies will also rise, meaning that few people are likely to have to pay the full cost after the rate increases to get insurance coverage.
“We think they will ultimately be surprised by the affordability of the premiums, because the tax credits track with the increases in premiums,” said Kevin Griffis, assistant secretary for public affairs at the Department of Health and Human Services.
The 22 percent rise reflects the average for all insurance marketplaces, both federal and state-based exchanges for which data are available. For insurance purchased through the federal HealthCare.gov exchange the rise will average 25 percent.
During a media briefing Monday, Griffis said the 2017 rates are roughly at the level the Congressional Budget Office forecast when the law was proposed. “The initial marketplace rates came in below costs,” he said. “Many companies set prices that turned out to be too low.” [NPR, 10/24/16]
Politico: “Three-Quarters Of Exchange Customers Will Be Able To Find A Plan For $75 A Month Or Less After Subsidies.” Politico health care reporter Rachana Pradhan highlighted that the “average rate increases … do not account for premium subsidies for which the majority of exchange customers qualify.” She cited HHS officials who “said nearly three-quarters of exchange customers will be able to find a plan for $75 a month or less after subsidies.” Kathryn Martin, HHS acting assistant secretary for planning and evaluation, said “even in places with high rate increases this year, consumers will be protected.” From the October 24 article:
The average rate increases outlined in the report do not account for premium subsidies for which the majority of exchange customers qualify. HHS officials said nearly three-quarters of exchange customers will be able to find a plan for $75 a month or less after subsidies.
“Even in places with high rate increases this year, consumers will be protected,” said Kathryn Martin, HHS acting assistant secretary for planning and evaluation.
HHS officials said their outreach and advertising will emphasize that most exchange customers won't pay the massive premium increases featured in headlines this year. The enrollment period begins Nov. 1 and lasts three months. [Politico, 10/24/16]
MSNBC’s Ali Velshi: After Two Years With Premiums “Set Too Low,” 2017 Adjustment Still Falls Within Initial Cost Projections. MSNBC correspondent Ali Velshi noted that while the 22 percent average increase nationwide for benchmark insurance plans, which averages to 25 percent for plans procured via Healthcare.gov, is “a big jump,” it still falls within initial projections from the Congressional Budget Office (CBO). Velshi added that the increase in 2017 looks like a spike because average premium hikes were “set too low” in past years. From the October 25 edition of MSNBC’s MSNBC Live with Craig Melvin:
ALI VELSHI: In 2017, they are expecting that 13.8 million Americans in total will be enrolled in America. This is not the number of people insured, obviously, because many people are insured through their work. This is the number of people insured through Obamacare. It’s a little increase over 2016. The silver plan, which is the benchmark plan they use -- there’s gold, silver, platinum, bronze, and other plans -- is going to be up an average of 22 percent. With a number you used, 25 percent, that's across 39 states. This will be the whole average, about 22 percent. And that will bring the premiums up to about $3,552 a year.
This level, is where the Congressional Budget Office, which is nonpartisan, said that the rates would likely be around 2017. The issue is the first two years, they felt the premiums had been set too low. So we're not actually -- it's a big jump, but it's actually where we were supposed to be. These are the forecasts. [MSNBC, MSNBC Live with Craig Melvin, 10/25/16]
Vox’s Sarah Kliff: “Obamacare Premiums Are Actually Right Around Where CBO Thought They Would Be Now” Which “Suggests Insurers Massively Underpriced In Early Years.”
CNN’s Christine Romans: Despite “Sticker Shock,” Most Consumers Will Pay “$100 Or Less A Month.” CNN chief business correspondent Christine Romans argued that while there is “sticker shock” from the reported premium increases, “three-quarters of the people getting Obamacare would get subsidies from the government, which would keep their price at about $100 or less a month.” She explained one of the reasons for the premium increase resulted from the failure of the “risk corridors” to contain costs but emphasized that “a lot of health care economists say there could be some changes to make it work better.” From the October 25 edition of CNN’s CNN Newsroom with Carol Costello:
CAROL COSTELLO: So what do we do, go back to the drawing board? CNN’s chief business correspondent Christine Romans joins me now with more. So, you heard what Donald Trump said. He said premiums are not just going up just 25 percent but as much as 80 percent. Is that true?
CHRISTINE ROMANS: So look, this is what we know, sticker shock, yes, but not 80 percent. You're talking about 22 percent increase in the Silver plan on average for next year. That’s the Silver plan. That means a 27-year-old, a typical 27-year-old, would pay $296 a month. This year on the federal exchanges, the inflation -- that increase in the cost -- was only 7.2 percent, still a lot. Still, Carol, three-quarters of the people getting Obamacare would get subsidies from the government, which would keep their price at about $100 or less a month. So three-quarters paying $100 or less a month, and there is wide variation around the states. [CNN, CNN Newsroom with Carol Costello, 10/25/16]
Right-Wing Media Claim The Rate Hike As Proof Of Obamacare “Death Spiral”
Fox’s Stuart Varney: Obamacare Is “In Collapse Mode.” In an interview with Fox & Friends, Fox Business host Stuart Varney exaggerated the premium increases in the health insurance exchanges, claiming that “it’s not affordable” and “not sustainable.” Varney claimed, “I think this thing is in collapse mode” and that “we’re looking at chaos after November 1, because you can’t get a fix in place any time in the very near future.” From the October 25 edition of Fox News’ Fox & Friends:
BRIAN KILMEADE (CO-HOST): Stuart Varney, host of Varney & Co., is here with the news about Obamacare premiums. They’re about to skyrocket double digits and that’s confirmed by the administration. Up on average 25 percent.
STUART VARNEY: Precisely. 25 percent up and you’ll get the notification on November 1, and that is an average for all of those people who get their health care, their insurance, in those 39 federal states. Up 25 percent. Now, here’s -- I think consumers have a very stark choice. That's what they’re facing. Pay up, up, up, up or pay a fine. It's obviously not affordable. And if you do pay up and you join, you still got these whopping great big deductibles. It is not affordable. It's not sustainable. I think this thing is in collapse mode. I think we're looking at chaos after November 1, because you can't get a fix in place any time in the very near future. [Fox News, Fox & Friends, 10/25/16]
Fox’s Bret Baier: “Republicans Will Pounce” On Premium Hike “As Confirmation That Insurance Markets … Are On The Verge Of Collapsing In What They Call A Death Spiral.” Fox News host Bret Baier reported on the raise in ACA premiums, claiming that “Republicans will pounce on the numbers as confirmation that insurance markets created by the 2010 health overhaul are on the verge of collapsing in what they call a ‘death spiral.’” He noted that while “the administration insists subsidies … will insulate consumers” from rate hikes, “state regulators are not so sure.” From the October 24 edition of Fox News’ Special Report with Bret Baier:
BRET BAIER (HOST): Right now, the Obama administration is confirming what we have been telling you for weeks. Obamacare premiums will go up sharply next year. And many consumers will be down to one insurer. The Department of Health and Human Services says before taxpayer provided subsidies kick in, premiums for the mid-level benchmark plan will increase an average, an average, of 25 percent across the 39 states served by the federally-run online market. And one-in-five customers will have plans from only one insurer to choose from. The administration insists that subsidies, which are supposed to rise alongside rising premiums, will insulate consumers from massive payouts. State regulators though are not so sure. Republicans will pounce on the numbers as confirmation that insurance markets created by the 2010 health overhaul are on the verge of collapsing in what they call a “death spiral.” The Obamacare open enrollment period starts November 1. One week before Election Day. [Fox News, Special Report with Bret Baier, 10/24/16]
Morning Joe Hypes “Free Market” Solutions To Health Care, Pushes Right-Wing Framing On Bill Clinton Obamacare Comments. Morning Joe co-host Mika Brzezinski claimed that the news showed customers would be facing “higher premiums and fewer options” before letting MSNBC analyst Rick Tyler, a former adviser to Sen. Ted Cruz (R-TX), claim that a “free market” health insurance system would do more to control cost increases than the ACA has done. Both Brzezinski and co-host Joe Scarborough concluded the segment by referencing former President Bill Clinton’s out-of-context comments at an October rally, saying, “I mean even Bill Clinton called it the craziest thing in the world.” From the October 25 edition of MSNBC’s Morning Joe:
MIKA BRZEZINSKI (CO-HOST): Higher premiums,fewer options. Health plans are set to rise on average by about 25 percent in the 39 states that use Healthcare.gov. The administration says about one-in-five consumers will only have a single insurer to choose from since major carriers like United Health Group, Humana, and Aetna have reduced their roles in the marketplace, and Donald Trump seized on the news while campaigning in Tampa last night.
RICK TYLER: Well I find it fairly remarkable. I’ve listened to a lot of economists saying the prices are going to go down, but I mean, gosh I say any third grader could have figured this out. You know, if you limit the choice and people -- and you don't have pre-existing conditions, and you don’t have natural downward cost pressures, absent those, what will happen? The prices are going to go up. So, what we have is young people still aren’t buying insurance. The Obama administration hasn’t fined a single person for not buying health insurance, and there’s millions and millions of people who are very expensive who are getting -- that’s just a role for disaster. I’ve always argued, people don’t like it, but a free market health care system. Free market works everywhere else, it ought to work in health, and it could be healthier, you’d have more choices, there's downward cost pressure. It causes providers to provide better quality services at the greatest convenience at the lowest cost. That’s the way the free market works.
BRZEZINSKI: The timing of this headline could be a little late. But I mean even Bill Clinton called it the craziest thing in the world. Did he not? And it kind of slipped.
JOE SCARBOROUGH (CO-HOST): Yeah, he talked about premiums going up and choices going down. “Craziest thing in the world,” he said to her. [MSNBC, Morning Joe, 10/25/16]
Breitbart News: “Obamacare’s Death Spiral: Double-Digit Cost Spikes, Disappearing Choices.” Breitbart’s Susan Berry emphasized that “Obama’s signature Obamacare healthcare law is offering American’s double-digit rate hikes and shriveled choices among fewer insurance companies in 2017.” Calling it “Obamacare’s death spiral,” Berry claimed that the number of insurers dropping out of exchanges would create “difficult and stressful” situations for customers dealing with pre-existing conditions. From the October 24 article:
President Barack Obama’s signature Obamacare healthcare law is offering Americans double-digit rate hikes and shriveled choices among fewer insurance companies in 2017.
“Consumers will be faced this year with not only big premium increases but also with a declining number of insurers participating, and that will lead to a tumultuous open enrollment period” for Obamacare before 2017, says Larry Levitt of the Kaiser Family Foundation.
Though Obamacare’s mandate of coverage for pre-existing conditions has been popular, the healthcare reform’s staggering problems means that customers with chronic medical conditions will likely find switching insurers rather difficult and stressful. [Breitbart News, 10/24/16]
Daily Caller: “Obamacare Is In The Midst Of A Death Spiral.” The Daily Caller’s Robert Donachie claimed that “Obamacare is in the midst of a death spiral,” emphasizing that the 25 percent premium increase “is not great news for the already struggling healthcare legislation.” Donachie argued that “17 co-ops have failed” and that “few health experts have positive things to say about the future of the legislation” as evidence of the alleged death spiral. From the October 24 article:
This is not great news for the already struggling healthcare legislation. Obamacare is in the midst of a death spiral: 17 co-ops have failed, the Tennessee Health Commissioner says the healthcare exchanges in the state are “very near collapse,” insurance companies in North Carolina have become a “financial sinkhole,” and few health experts have positive things to say about the future of the legislation.
The total number of insurers participating on the Obamacare exchanges is likely to drop from 232 this year to 167 in 2017. That is a loss of 28 percent in just 12 months. [The Daily Caller, 10/24/16]
Right-Wing Media Do This Every Time There Is A Rate Hike
Right-Wing Media Repeatedly Exaggerated Claims Of Massive Rate Hikes That Would Doom The Law. Conservative media have spent years trying to brand the ACA as being in the midst of a “death spiral” and have stoked fears of the law’s collapse with predictions of skyrocketing health insurance premiums. In 2014, several conservative media outlets predicted that health care costs would “skyrocket” as a result of the ACA's restructuring of the private insurance market. Conservatives continually predicted impending cost spikes that would result in customers refusing to purchase insurance plans, linking these false predictions of price increases to the alleged inevitable “death spiral” of the insurance market. [Media Matters, 3/20/14, 12/27/14, 7/16/15]