Topping the headlines this week was the news of yet another Obamacare crisis, as many Americans face out of control premium increases next year.
Our extreme partisan politics spin the issue conveniently for each side’s talking points – the left tries to trivialize the outrageous premium amounts while the right wants to showcase the failure as an irreversible death spiral for Obama’s signature legislation.
Bad news bears
When I saw the headlines, I immediately made a mad dash online to healthcare.gov to see how much my premium would rise. After watching my premiums rise 34 percent last year, I thought maybe Florida Blue would give me a break. Florida Blue doesn’t have financial problems like many Obamacare providers, and is among the most financially healthy participants in the exchange nationwide.
Instead, I’m facing another 28 percent rise, bringing my premium up to an eye-watering $628.62 a month. Nevermind that I could comfortably lease a German-made luxury sedan for this amount of money, policymakers in Florida and Washington seem to think that average people can easily afford this amount, as our regulators signed off on these increases.
“It is a highly regulated industry, health insurance in general, and we have to submit our rates to the Office of Insurance Regulation who can come back and request that we make adjustments,” Christie DeNave, a spokesperson for Florida Blue told GenFKD. “Any increase that we see in premiums are to address rising healthcare costs, and by law, our administrative costs are restricted to 20 cents on every healthcare dollars or less.”
Fortunately, I have a very generous employer that picks up most the cost of this excellent Platinum-level health plan, but this is the exception to the norm.
November surprise
In the past week, many people have found out that their premiums are jumping sky-high across the board, and there are several reasons behind the out-of-control increases. Some consumers are finding they only have one option from which to pick.
In all fairness to Florida Blue and other insurance companies, they are not entirely to blame for this mess. Today’s healthcare system in America is a frankenstein-like accumulation of haphazard policy decisions made over generations.
The Obamacare Crisis explained
If you’ve had any sort of encounter with our healthcare system, you might be led to believe that it was designed by madmen. While no single entity is responsible for our healthcare system woes, we seem to lack to the political maturity on either side of the partisan divide to fix it.
The problem that is often glazed over when talking about Obamacare is the sheer cost of healthcare in America. Nearly every procedure and every drug in the United States costs significantly more than anywhere else, and healthcare costs are once again trending upwards after taking a brief hiatus in recent years. Logically, those crazy costs are reflected in our insurance premiums.
Then, there are flaws within Obamacare’s design that are driving costs. Obamacare mandated that every American purchase coverage through private insurance companies. Since the law was rolled out, these insurance companies have discovered that they’re bleeding money on healthcare exchanges because they underpriced their products or underestimated the costs, depending on how you look at it.
As it turns out, many people who enrolled in Obamacare were sick, and heavy users of medical services. Rather than enroll, healthy people instead just paid the fine for not having health insurance, or cheated the system and only purchased health insurance when they needed medical services. This has created a situation where many Obamacare exchanges are on the verge of collapsing, as healthy people avoid the exchanges, while sick people flock to them.
Logically, insurance companies have been fleeing from the exchanges, and this has caused decreased competition, which is only feeding premium increases. About 20 percent of consumers only have one insurance company to pick from in their zip code, since major insurance companies like UnitedHealth Group, Humana and Aetna have pulled back their offerings across the country.
The bottom line: having mostly sick people in your insurance pool is a money pit.
A success by some measures
Obamacare was a lifeline for millions of people without coverage. There are generous federal subsidies available for the working poor, which has been a godsend to many people who needed help buying medical coverage. Subsidies will now go up for low-income earners facing higher premiums, but that will mean more federal expenditures, not exactly good news for a federal government that’s already nursing a large fiscal deficit.
For middle income folks, rising premiums have been a disaster, because they don’t make enough money to cover the out-of-control premiums, but make too much to qualify for federal aid. Changing insurance plans is also a nightmare, as your doctor and your hospital may not be covered. For many of us, we’re deeply tethered to our insurance plans that continue to go up significantly every year.
What we can learn from Switzerland
Switzerland is a lot like the United States–it has sky-high healthcare costs (not as absurd as ours to be fair) and private insurers dominate healthcare. Most notably, they are a lot tougher on those who don’t purchase health insurance, quickly garnishing their wages if they don’t obey the insurance mandate. Taking the mandate seriously could solve one of the most serious problems that Obamacare faces today, where healthy young people aren’t signing up for health insurance.
A tougher mandate would bring many healthy folks into the insurance exchanges, and help restore fiscal health and sustainability. Of course, a strictly enforced mandate is bound to stir up controversy among people who don’t believe Obamacare is constitutional.
Fixing the system
Most people agree that some sort of healthcare reform was needed in the United States when Obamacare was passed in 2010. It has now become obvious that the law did not adequately address all of the complicated issues that continue to plague American healthcare.
Fixing the system continues to be a partisan shouting match. People on the left will tell you the law didn’t go far enough, and that we needed a public option, or a government-provided healthcare plan to compete with the private insurers. People on the right will claim that the law didn’t do enough to spur competition, like the ability to sell insurance across state lines.
While we often read the news as passive observers, much of what is going in the world directly affects us. As the policy blunders of the past come back to haunt us today, we should recognize that a crisis is a terrible thing to waste. In the real world, people who actually care about fixing our healthcare system will have to embrace practical solutions from both parties.
UPDATE: The Inflation Reduction Act of 2022
Medicare can now negotiate drug prices with the Inflation Reduction Act of 2022. The cost of pharmaceuticals is a major issue in America, and many are hoping that this legislation, which likely won’t reduce inflation, might help reduce drug costs.
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