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@redraider2007
How Democrats Learned to Love Insurance Companies
The party is working with its old punching bag to stop the Republicans’ ObamaCare reform efforts.
Allysia FinleyOct. 30, 2017 6:30 p.m. ET
President Trump signs an executive order on health care at the White House, Oct. 12. Photo: Alex Wong/Getty Images
By
Allysia Finley
Democrats used to denounce health insurers as greedy, but lately their mutual interest in propping up ObamaCare has made these former foes into something more like frenemies.
The cost for the most popular ObamaCare silver plans will increase 37% on average next year. Democrats and insurers are both blaming soaring premiums on the Trump administration, which is purportedly trying to sabotage the law. They complain that loosening the individual mandate and slashing ObamaCare’s advertising budget reduces enrollment among the healthy youngsters who keep premiums in check. They say the White House’s move to end cost-sharing payments to insurers will drive up premiums and repel “young invincibles.”
These arguments are dubious, not least because premiums were rising even before Mr. Trump took office. Since 2013,the average premium on the ObamaCare exchanges has doubled. The real ObamaCare saboteurs were the Democrats who designed and passed such a haphazard law.
Insurers need young, healthy people as customers to offset the costs of covering older and sick people. But the law’s provision allowing young adults to stay on their parents’ plans up to age 26 has removed millions of potential customers from the private insurance market. About 2.3 million people 19 to 25 were added to family health plans between September 2010 and the start of open enrollment in October 2013, according to a report last year from the Department of Health and Human Services.
Democrats for whatever reason didn’t foresee just how many young adults would jump onto their parents’ coverage. The share of young adults with employer-sponsored insurance has risen by more than 10 percentage points under ObamaCare, according to Census Bureau data. Such plans are typically cheaper than the ones available on the individual market, thanks to favorable tax treatment, and companies with more than 100 employees are exempt from many costly state mandates and ObamaCare’s 10 essential benefits.
Young people are also flocking to Medicaid, bringing states billions more in federal cash while depriving private insurers of healthy customers. Since 2014, when ObamaCare allowed states to increase Medicaid eligibility to 138% of the poverty line, 2.5 million more Americans age 18 to 35 have enrolled. This was foreseeable. Medicaid enrollment among the young had been increasing even before ObamaCare passed. There are now 13.4 million young people on Medicaid, up from 4.8 million in 2000. The number of young people who signed up on ObamaCare’s exchanges, by comparison, is only 3.3 million.
Medicaid and the ObamaCare parental option have become safety nets for millions of millennials who have dropped out of the labor force. What’s more, those young people who do have jobs aren’t exactly raking in the dough. The average weekly earnings for a worker age 20 to 24 is $537 ($27,294 a year) while those 25 to 34 earn $778 ($40,456), according to the Bureau of Labor Statistics.
This could help explain why ObamaCare’s individual mandate has been so ineffective. In 2015, only 6.6 million of the 29 million uninsured paid the penalty. ObamaCare waives the tax penalty if the uninsured person would have to spend more than 8% of his earnings to afford the lowest-cost bronze plan available to him (after tax credits are included). What this means is that in expensive health markets with older risk pools—such as the Northeast and the Midwest—low-wage workers need not fear the taxman. The law also exempts people who face “financial hardships” that prevent them from buying coverage.
All of these distortions stem from the fact that Democrats tried to force young people with low pay to subsidize health care for older people who generally earn more. Under ObamaCare’s age-rating bands, insurers can charge 55- to 64-year-olds no more than three times what young customers pay—meaning higher premiums on the latter. Tax credits were supposed to offset this increased cost on the young, but they have brought many more older people into the insurance market, according to federal data. States like West Virginia, which has an older demographic profile, saw two older exchange sign-ups for every young one.
Democrats and insurers argue Washington should spend more on marketing ObamaCare to young people. But Texas, which spent little on marketing, has a younger risk pool on the exchanges than California, which spent heavily. One real difference is that Texas didn’t expand Medicaid, and California did. Advertising alone won’t impel people to buy an over-priced product they don’t want.
Insurers also howl that the administration’s plan to stop cost-sharing payments to insurers will require them to raise premiums. This, they say, will “destabilize” the ObamaCare marketplaces. But most people won’t be affected, because as premiums rise the tax credits increase commensurately. Higher premiums will squeeze the 15% or so of enrollees who earn more than 400% of the poverty line and are thus more likely to be older.
While Democrats and insurers have a vested interest in maintaining ObamaCare’s regulatory edifice, the exchanges’ poor design has invited GOP reforms. For that they only have themselves to blame.
Ms. Finley is an editorial page writer at the Journal.
Appeared in the October 31, 2017, print edition.
@redraider2007
How Democrats Learned to Love Insurance Companies
The party is working with its old punching bag to stop the Republicans’ ObamaCare reform efforts.
Allysia FinleyOct. 30, 2017 6:30 p.m. ET
President Trump signs an executive order on health care at the White House, Oct. 12. Photo: Alex Wong/Getty Images
By
Allysia Finley
Democrats used to denounce health insurers as greedy, but lately their mutual interest in propping up ObamaCare has made these former foes into something more like frenemies.
The cost for the most popular ObamaCare silver plans will increase 37% on average next year. Democrats and insurers are both blaming soaring premiums on the Trump administration, which is purportedly trying to sabotage the law. They complain that loosening the individual mandate and slashing ObamaCare’s advertising budget reduces enrollment among the healthy youngsters who keep premiums in check. They say the White House’s move to end cost-sharing payments to insurers will drive up premiums and repel “young invincibles.”
These arguments are dubious, not least because premiums were rising even before Mr. Trump took office. Since 2013,the average premium on the ObamaCare exchanges has doubled. The real ObamaCare saboteurs were the Democrats who designed and passed such a haphazard law.
Insurers need young, healthy people as customers to offset the costs of covering older and sick people. But the law’s provision allowing young adults to stay on their parents’ plans up to age 26 has removed millions of potential customers from the private insurance market. About 2.3 million people 19 to 25 were added to family health plans between September 2010 and the start of open enrollment in October 2013, according to a report last year from the Department of Health and Human Services.
Democrats for whatever reason didn’t foresee just how many young adults would jump onto their parents’ coverage. The share of young adults with employer-sponsored insurance has risen by more than 10 percentage points under ObamaCare, according to Census Bureau data. Such plans are typically cheaper than the ones available on the individual market, thanks to favorable tax treatment, and companies with more than 100 employees are exempt from many costly state mandates and ObamaCare’s 10 essential benefits.
Young people are also flocking to Medicaid, bringing states billions more in federal cash while depriving private insurers of healthy customers. Since 2014, when ObamaCare allowed states to increase Medicaid eligibility to 138% of the poverty line, 2.5 million more Americans age 18 to 35 have enrolled. This was foreseeable. Medicaid enrollment among the young had been increasing even before ObamaCare passed. There are now 13.4 million young people on Medicaid, up from 4.8 million in 2000. The number of young people who signed up on ObamaCare’s exchanges, by comparison, is only 3.3 million.
Medicaid and the ObamaCare parental option have become safety nets for millions of millennials who have dropped out of the labor force. What’s more, those young people who do have jobs aren’t exactly raking in the dough. The average weekly earnings for a worker age 20 to 24 is $537 ($27,294 a year) while those 25 to 34 earn $778 ($40,456), according to the Bureau of Labor Statistics.
This could help explain why ObamaCare’s individual mandate has been so ineffective. In 2015, only 6.6 million of the 29 million uninsured paid the penalty. ObamaCare waives the tax penalty if the uninsured person would have to spend more than 8% of his earnings to afford the lowest-cost bronze plan available to him (after tax credits are included). What this means is that in expensive health markets with older risk pools—such as the Northeast and the Midwest—low-wage workers need not fear the taxman. The law also exempts people who face “financial hardships” that prevent them from buying coverage.
All of these distortions stem from the fact that Democrats tried to force young people with low pay to subsidize health care for older people who generally earn more. Under ObamaCare’s age-rating bands, insurers can charge 55- to 64-year-olds no more than three times what young customers pay—meaning higher premiums on the latter. Tax credits were supposed to offset this increased cost on the young, but they have brought many more older people into the insurance market, according to federal data. States like West Virginia, which has an older demographic profile, saw two older exchange sign-ups for every young one.
Democrats and insurers argue Washington should spend more on marketing ObamaCare to young people. But Texas, which spent little on marketing, has a younger risk pool on the exchanges than California, which spent heavily. One real difference is that Texas didn’t expand Medicaid, and California did. Advertising alone won’t impel people to buy an over-priced product they don’t want.
Insurers also howl that the administration’s plan to stop cost-sharing payments to insurers will require them to raise premiums. This, they say, will “destabilize” the ObamaCare marketplaces. But most people won’t be affected, because as premiums rise the tax credits increase commensurately. Higher premiums will squeeze the 15% or so of enrollees who earn more than 400% of the poverty line and are thus more likely to be older.
While Democrats and insurers have a vested interest in maintaining ObamaCare’s regulatory edifice, the exchanges’ poor design has invited GOP reforms. For that they only have themselves to blame.
Ms. Finley is an editorial page writer at the Journal.
Appeared in the October 31, 2017, print edition.
