May 25, 2018
The Washington Post’s analysis of projected increases in the cost of health care plans in the exchanges created by the Affordable Care Act (ACA) is seriously confused. Paige Winfield Cunningham seems to think she found a contradiction between Democrats who minimized the importance of price increases during the Obama presidency, but now highlight smaller increases projected under the Trump administration. Rather than being a contradiction, this reflects confusion on Cunningham’s part.
The original premiums in the exchanges were lower than had been projected by the Congressional Budget Office prior to the bill’s passage. Insurers priced their plans too low either because they wanted to attract patients or they failed to predict the health condition of the people who signed up. By 2016, premiums had pretty much caught up with the original projections.
Even though the 7.0 percent rate of increase projected for the next decade is lower than the 2017 increase, it still implies that premiums will double in nominal terms and rise by more than 60 percent after adjusting for inflation over the next decade. If this projection proves accurate it means that the unsubsidized premiums will be unaffordable to all but the richest people.
For example, this projection implies that an unsubsidized silver plan would cost more than $11,000 (in 2018 dollars) to a single 50-year old in 2027. A 60-year-old would have to pay almost $17,000 for a silver plan. It is understandable that anyone concerned about affordable health care would not view this as a good story, even if they happened to be Republicans.
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