5 things you should know about Obamacare’s rate hikes

The Observer editorial board

Americans will see costs on many Obamacare plans jump an average of 25 percent next year.
Americans will see costs on many Obamacare plans jump an average of 25 percent next year. AFP/Getty Images

Obamacare customers and supporters received bad news Monday: Insurers are raising premiums for popular plans on the Obamacare exchanges by an average of 25 percent.

As with most everything involving the Affordable Care Act, however, the news was met with a bit of misinformation – and a lot of political spin.

Let’s cut through that with five things you should know about the premium hikes:

1) Your insurance premiums are probably not going up at a double-digit rate

Republicans have rushed to trumpet the bad Obamacare news in campaigns across the country, but the premium spikes actually affect a relatively small number of people. Most Americans get their insurance through their employers, Medicare or Medicaid, with only 7 percent of Americans getting their coverage on the Obamacare exchanges. That’s about 10 million people – and 85 percent of them will have their premiums reduced with subsidies.

That leaves less than 1 percent of the insured who will be hit hard by premium increases, according to estimates. We shouldn’t minimize the impact an increase will have on those people, but Republicans also shouldn’t scare Americans into thinking their rates are also going up 25 percent.

2) The big increase is probably not an annual event.

So say health care experts, who believe the double-digit increase is a one-time correction from insurers who’ve lost money on the exchanges for too long. That doesn’t mean Obamacare isn’t struggling. It is. The rate hike is a symptom of larger issues that have caused insurers like Aetna and United Healthcare to announce they’re pulling out of state exchanges, including North Carolina’s.

3) Blame Republicans – and Democrats – for Obamacare’s ills.

The core reason for Obamacare’s struggles is simple: Too many sick people (and not enough healthy people) have insurance on the exchanges. That means insurers are paying too much money out, without getting the benefit of low-cost healthy folks paying premiums.

The fix, at least according to insurers, begins with some simple steps. Administrators need to strengthen and enforce sign-up mandates that nudge young, healthy people onto the exchanges. Obamacare also has to fulfill promises regarding “risk corridors,” which are essentially payments to insurers that have lost money.

Neither is being done. Why? The Obama administration doesn’t want to endure the political cost of strong-arming people into buying coverage, and Republicans don’t want to help Obamacare by passing a fix to help offset insurers’ losses.

Congress also could entice more people to Obamacare with perks such as vision coverage or prescription benefits. One intriguing solution that insurers don’t want: The next administration could link the Medicaid and Medicare Advantage revenue that insurers love with their participation in the Obamacare exchanges.

4) Obamacare is still working, by the way.

Can a law be successful and struggle at the same time? Yes. Obamacare, despite the danger it’s in, has accomplished to this point its critical tasks of insuring millions more Americans (through the exchanges and Medicaid expansion) and slowing the overall rise of health care costs.

Remember this, too: Republicans still have not offered an Obamacare alternative that accomplishes these things and keeps benefits like coverage for preexisting conditions.

Which leads us to one thing you do know:

5) Elections matter.

Obamacare needs to be improved, not repealed. Voters need to elect representatives who will do so.