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Alex Azar: Obamacare benchmark premiums to drop for first time

September 27, 2018

Health SecretaryAlex M. Azar II said Thursday the average premiums for “benchmark” plans on the federal Obamacare marketplace are set to drop for the first time in the program’s history.

Insurers have requested 2019 rates for the plans that are 2 percent lower than this year’s on HealthCare.gov, which serves dozens of states without their own Obamacare websites.

“Meanwhile, the number of federal exchange insurers will grow for the first time since 2015,” Mr. Azar said during a speech at Lipscomb University in Nashville. “Let me repeat that: Under President Trump, premiums are dropping, and choices are returning.”

The news about benchmark plans, which are used to determine subsidy levels for qualified customers, follows an independent study by Avalere Health that said average premiums for all plans in the individual market should rise by 3.1 percent in 2019.

The positive trends are robbing Democrats, who’ve cried “sabotage,” of one of their main attack lines against Republicans this midterm cycle, though health care experts who’ve analyzed the shift say Mr. Trump can’t take a bow.

They say Obamacare premiums will increase modestly or drop next year because insurers overcharged in recent years and are finally catching up with the program, which attracted a flood of sicker-than-expected customers in its early rounds.

They also say plans adept at serving low-income populations are increasingly willing to enter new counties, particularly since they can enjoy a monopoly in places that risk having a “bare” marketplace each year.

Yet Mr. Azar, in his speech, credited Mr. Trump’s early moves to stabilize the market with ushering in a better outlook.

Insurers largely applauded Mr. Trump’s stabilization rule in 2017, which cut Obamacare’s open-enrollment period in half, so customers signed up before the start of the calendar year.

He also required customers to prove they qualified for special enrollment periods, so customers didn’t “game” the system and cause upheaval by dropping in and out of the market.

And Mr. Trump approved a series of state plans to offer “reinsurance,” in which money is set aside to blunt the costs of extra-pricey customers, so the rest of the market can pay less in premiums.

“It turns out, when you have a president who’s willing to take decisive action, who understands business, who’s willing to work with the private sector, you can find a way to help American patients, even within a failed system like the ACA,” Mr. Azar said. “The president who was supposedly trying to sabotage the Affordable Care Act has proven better at managing it than the president who wrote the law.”

Obamacare’s defenders contend that insurers would have requested even lower premiums for 2019 if Mr. Trump and Republicans had left the program alone.

Republicans failed to replace Obamacare with a better system as promised last year, settling instead for a repeal of penalties tied to the “individual mandate” that required Americans to get covered or pay a tax.

Insurers cited repeal of the mandate, which was designed to prod healthy people into the market, and Mr. Trump’s decision to extend off-ramps from the program as two reasons they had to request higher rates than they would have otherwise.

The president approved “association” plans for like-minded businesses that want to increase their purchasing power. He also expanded the use of barebones, short-term insurance for individuals, saying they should be able to hold the loans for a full year and renew them for two extra years.

Neither type of plan has to comply with the full slate of consumer protections written into Obamacare, potentially drawing much-needed consumers out of the program and forcing insurers to protect themselves with higher rate requests.

“Premiums would be going down a lot if not for repeal of the individual mandate penalty and expansion of short-term plans,” Larry Levitt, senior vice president at the Kaiser Family Foundation, said on Twitter.

Mr. Azar said baseline premiums are still too high after years of increases, however, so the administration is pushing Congress to take another stab at repeal if the GOP staves off a “blue wave” and gains seats in the midterm elections.

“The president has managed to stabilize rates, but the underlying premiums are still unaffordable for Americans who don’t qualify for the law’s generous subsidies,” Mr. Azar said. “The ACA is not ‘fixed’ or even ‘fixable’ without Congress’s repealing and replacing it.”

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