Obamacare Doubled Average Individual Health Insurance Premium, Study Finds
Four years after the partial implementation of the Affordable Care Act, popularly known as Obamacare, the average premium for individual health insurance in the United States increased 105 percent according to new research from The Heritage Foundation.
The researchers conclude Obamacare forces consumers to “pay more for less,” and they note “fewer people had individual policies in December 2017 than in 2014, the first year in which Obamacare took full effect; and the number of small firms offering health benefits to their workers dropped by 24% between 2012 and 2016.
“The best way to provide relief for Americans struggling under these heavy burdens is to replace Obamacare with free-market solutions that put patients and doctors—not federal bureaucrats—in charge of health care decisions and dollars,” the researchers wrote.
Waivers Reducing Damage
Bob Moffit, a senior policy fellow in domestic studies at The Heritage Foundation, says states that sought 1332 Medicaid waivers, which allow them to implement cost-saving measures, experienced premium reductions despite the cost pressures of the Obamacare exchanges.
“In several of those states, the average price of premiums actually dropped,” Moffit said. “However, in half of U.S. counties, people in the Obamacare exchange have the ‘choice’ of only one insurer. Many young and healthy people have abandoned the exchanges altogether, leaving only older and sicker people to support the exchange. They’ve become, in essence, federally subsidized high-risk pools.”
The loss of young, healthy people from the exchanges helped drive up premium costs, says Justin Haskins, executive editor and research fellow at The Heartland Institute, which publishes Health Care News.
“Obamacare increased premiums overall by imposing regulations that increase premiums on young and healthy individuals,” Haskins said. “These higher premiums caused the healthiest people to drop their coverage, which forced insurance companies to raise premiums on the smaller and sicker risk pool. This continues to drive more people out of the individual market and keeps pushing premiums higher.”
States should take advantage of the Trump administration’s willingness to allow them to roll back ACA regulations, Haskins says.
“What the states can do is authorize insurance companies and employers to sell affordable insurance options known as association health plans and short-term insurance plans,” Haskins said. “President Trump recently allowed insurance companies to sell these plans at the federal level, and states should take advantage while they still have an administration in the White House that is committed to providing consumers with more health insurance options.”
Equalizing Tax Treatment
Haskins says one solution to ever-rising premiums is for government to equalize the tax treatment of health care benefits.
“One of the best free-market strategies to lower insurance premiums is to end the health benefits exclusion for employers, which allows employers to exclude from their tax burden premiums paid for employer-sponsored health insurance,” Haskins said. “This will encourage employers to increase wages and sell less-costly insurance plans.”