Obamacare Is Having A Surprisingly Good Year
It’s time to rethink the individual mandate.
Obamacare’s marketplaces are having a surprisingly good year.
Two years into the Trump administration, more health plans are signing up to sell coverage. Premiums for mid-level plans actually went down 1 percent. This is after years of double-digit increases, many under the Obama administration.
This all really surprises me. These positive changes are happening the same year that Obamacare’s individual mandate — the penalties for not carrying health coverage — is going away. They’re happening at the same time the Trump administration has rolled out policy changes that were expected to weaken the marketplaces, like letting consumers enroll in skimpier, cheaper plans that don’t comply with Obamacare rules.
I thought these changes would have scared insurers away from the marketplaces, or at least encouraged them to jack up their prices. But that just doesn’t seem to be happening.
I called up two of the experts I trust the most when it comes to understanding Obamacare marketplaces — Chris Sloan at Avalere Health and Larry Levitt at the Kaiser Family Foundation — to figure out what was going on.
Both of them agree: The Obamacare marketplaces seem to be pretty resilient to policy headwinds.
”It feels like we’ve finally hit a plateau with this market,” says Sloan. Or, as Levitt puts it, “At this point, the market looks pretty stable.”
Part of that, they say, has to do with something that seems boring but might actually be Obamacare’s secret weapon: the structure of its premium tax credits.
These are the subsidies that low- and middle-income Americans receive to purchase coverage and, crucially, they are tethered to the price of a mid-level health plan. When premiums go up, the tax credit goes up with it. This makes the 9 million or so subsidized Obamacare enrollees very price-insensitive; the tax credits insulate them from the sticker price of their coverage.