Report Touts Pre-Obamacare Premium Hikes As Obamacare Pledge To Lower Costs Abandoned

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A report from an Obamacare architect is being used to argue that Obamacare rate increases aren’t important, because premiums rose before the health care law too — never mind the Affordable Care Act’s promise to make health care, well, more affordable.

Jonathan Gruber, an MIT economist who helped author the president’s health care law, published a study with The Commonwealth Fund which concluded that between 2008 and 2010, health premiums rose on average 10 percent each year in the 22 states with available data. It’s one of the first times the data has been compiled, given that states were not required to keep track of premium rates before the Affordable Care Act.

The Obama administration promised that the health care law would lower costs for Americans, but reaction to the report indicates that supporters appear to have abandoned that argument. Commonwealth Fund president David Blumenthal applauded the result that Obamacare hasn’t put the slightest dent is annually rising premium rates. Blumenthal noted to USA Today that even if premiums rise due to Obamacare, the health care law is likely to provide a “better deal” for customers due to the new slew of mandated benefits.

According to insurer filings in the few states that have reported 2015 rates so far, premiums will rise as much or more than the 10 percent average in the years leading up to Obamacare’s passage. And that’s in addition to out-of-pocket costs rising and narrowing networks limiting consumers’ choice more than ever, which may mean despite Blumenthal’s cheery outlook, customers aren’t getting a “better deal.” (RELATED: Report: Employee Health Care Premiums Boosted Under Obamacare)

But the report’s main justification that health care costs aren’t growing much higher than they were before Obamacare fails to mention a key point: until 2017, premium rates are being manipulated by a temporary, $20 billion-strong redistribution fund, meant solely to prevent insurers from hiking premiums due to sick customers.

A report from the University of Minnesota’s Stephen Parente last week found that Obamacare’s risk corridor and reinsurance provisions won’t prevent premium hikes, but simply delay the pain until 2017. (RELATED: Top Health Economist Predicts Obamacare Will Ultimately Boost Number Of Uninsured)

The risk mitigation policies redistribute funding to insurers whose customers turn out to be the sickest and most costly to insure, in order to keep insurers from boosting premiums dramatically out of fear of higher costs under the Affordable Care Act. While the programs were originally meant to redistribute payments from the insurers themselves, the Obama administration recently raised the possibility of using taxpayer funding to make even larger bailouts to insurers as well, out of fear that a sicker-than-expected customer pool would cause rate hikes. (RELATED: Obama Admin Rule Opens Door To Insurance Company Bailout) 

The two programs are slated to end in 2016. Parente predicts that when they do, premiums will shoot up, disproportionately hitting low-income customers with the lowest-cost, least-inclusive Obamacare plans, shooting their premiums up between $2,132 and $4,174 between 2016 and 2017.

The country will have to wait to see whether Parente’s analysis comes true when the risk corridor provisions run out. But the move indicates that Obamacare supporters — and architects — may be abandoning the argument that Obamacare lowers premiums.

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