Secretary of Health and Human Services Tom Price is fielding criticism for his Thursday video in detailing the problems Americans are facing due to Obamacare.
“Sorry, Tom Price, you’re overselling the premium hikes,” charges an Axios post on Friday.
“Health and Human Services secretary Tom Price put out a video last night making the Trump administration’s case for replacing Obamacare — but if you watch it and say, ‘I didn’t know my premiums went up that much,’ that’s because they didn’t,” Axios reports.
“Under current law, insurance premiums, the price that you have to pay to buy a health insurance policy, continue to rise at an alarming rate, as higher out-of-pocket costs are squeezing family budgets,” Price said in the video. “In the past year alone, the average premium has gone up 25 percent. And since the current health law started, premiums have gone up an amazing 99 percent.” (RELATED: Price: Repealing Obamacare Means ‘Real Money’ In Your Pocket’)
Axios calls the premium increases in Obamacare exchanges “scary,” but dings Price because employer-sponsored health care plans, which cover around 160 million Americans, rose by 3 percent in 2016 — not a drastic hike. But that leaves out a bit of the story.
Axios cites a September, 2016, Kaiser/HRET survey, which found that premiums in employer-provided health plans increased by 3 percent last year, only slightly higher than workers’ wages (which rose 2.5 percent) and inflation (1.1 percent). That’s on par with 2015, when employer-provided family premiums grew 4 percent compared to the year before.
The same survey that Axios cites, however, also identifies the reason for the slow increase in the price of employer plans: a rapid shift toward high-deductible health plans, which feature those “higher out-of-pocket” costs that Price laments in the video.
“The recent trend in part reflects covered workers moving into high-deductible plans compatible with Health Savings Accounts (HSAs) or tied to Health Reimbursement Arrangements (HRAs),” the survey found. “These plans have lower average premiums than other plan types.”
“We’re seeing premiums rising at historically slow rates, which helps workers and employers alike, but it’s made possible in part by the more rapid rise in the deductibles workers must pay,” Kaiser Family Foundation president and CEO Drew Altman said in response to the survey.
High-deductible health plans trade off much lower premiums for higher out-of-pocket costs such as deductibles, co-pays and prescription coverage, making them historically popular with healthier customers who aren’t expecting to make much use of their health coverage.
These plans have become markedly more popular with employers since 2008. The year 2016 marked the first time that over half of workers — or, 51 percent — had a deductible over $1,000 for an individual health plan, according to the survey. That’s up from 46 percent in 2015.
One significant driver of the shift has been Obamacare. The widely-criticized “Cadillac tax” places a 40 percent excise tax on high-premium health insurance plans.
The tax would increase costs dramatically for companies who already provide high-quality (“Cadillac”) health insurance — and many are actively seeking to avoid it. It’s provoked some businesses to avoid the tax by shifting employees into plans with lower premiums and higher deductibles, before the tax hits.
The measure was initially supposed to take effect in 2018, but the Obama administration delayed it until 2020, amid intense backlash from the business community.
“Nearly two thirds (64%) of large employers offering health benefits say that they conducted an analysis to determine if any of their plans would exceed the Cadillac tax thresholds, and a quarter (27%) of this group say their largest plan would do so,” the same survey concluded. “15 percent say they have increased their plan’s cost-sharing to avoid reaching the excise tax thresholds, and 9 percent say they switched to a lower-cost health plan.”
That’s well in advance of the Cadillac tax taking effect. Initially supposed to take effect in 2018, Congress delayed it until 2020, amid intense backlash from the business community.
The shift may be helping to keep employer premiums from surging to the same level as the imploding Obamacare exchanges. The result is similar, however: an Obamacare provision contributing to higher health care costs.
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