By Jeffrey H. Anderson*
The part of Obamacare that has raised premiums the most is its “community rating” mandate. That mandate effectively bans the traditional understanding of insurance, which dates back at least to the Renaissance. Insurance has always been something that one must buy before the thing happens that one is protecting against. Under Obamacare’s method of protecting those with preexisting conditions, that is no longer true. The result is the health-care equivalent of letting someone buy homeowners insurance—at no higher cost—after his or her house is already on fire, or life insurance from one’s deathbed. The predictable result is skyrocketing premiums, which we have seen under Obamacare.
Premiums in the individual market under Obamacare have risen 40 percent over the past two years. On average, according to Obamacare supporter Charles Gaba, for every $100 that an Obamacare plan cost in 2015, it cost $112 in 2016 (a 12 percent increase) and costs $140 this year (another 25 percent increase). So, on average, a plan that cost $7,500 just two years ago now costs $10,500.
Yet the link is not often made between Obamacare’s preexisting-conditions protections, which are frequently touted as one of the great benefits of the legislation and are allegedly popular, and Obamacare’s soaring premiums, which are unquestionably unpopular. It has been hard to know, therefore, what Americans would think of Obamacare’s preexisting-conditions protections if they understood the link between those protections and rising costs.
A new poll by McLaughlin & Associates, commissioned by Hudson Institute, sheds some light on this matter. It finds that, when the link is made between Obamacare’s preexisting-conditions protections and higher premiums, Americans prefer lower premiums to such protections.
The poll (which included 36% Democrats and 33% Republicans) asked the following question (PDF and crosstabs here):
Some say Obamacare’s pre-existing conditions protections, which now let people wait until they’re sick to buy insurance, are a good thing, while others say that’s like buying homeowners insurance while your house is on fire and this is the main reason why Obamacare premiums have gone up 40% over the past two years. Which of the following would you prefer most?
1. The current Obamacare pre-existing conditions protections remain unchanged
2. Lower health insurance premiums
3. Different pre-existing conditions protections that don’t raise premiums as much
A plurality of respondents (37%) said they would prefer lower premiums. Respondents were split about evenly between whether they would prefer to keep Obamacare’s preexisting-conditions protections (27%) or substitute different preexisting-conditions protections that wouldn’t raise premiums as much (26%). (Independents also preferred lower premiums (37%), and they preferred different protections (28%) to Obamacare’s protections (20%).)
Thus, the poll finds that Americans favor lower premiums (with or without preexisting-conditions protections) over Obamacare’s preexisting-conditions protections, by a tally of more than 2-to-1: 63% to 27%. Among independents, that margin is more than 3-to-1: 65 to 20%.
At the same time, the poll finds that Americans prefer preexisting-conditions protections (whether Obamacare’s or different ones) over lower premiums without preexisting-conditions protections, by a tally of 53% to 37%.
It seems clear, then—based on the poll’s results—that Americans do want preexisting-conditions protections, but they do not want Obamacare’s preexisting-conditions protections if those lead to significantly higher premiums, which they unquestionably do. Indeed, even the Obama White House said that if the individual mandate were eliminated or rendered ineffective, Obamacare’s “community rating” mandate (coupled with “guaranteed issue”) would make health insurance “cost prohibitive,” “would lead to double digit premium increases,” and “would significantly increase the cost [of] health care spending nationwide.”
As Stephanie Cutter wrote on the White House blog in 2011,
“We don’t let people wait until after they’ve been in a car accident to apply for auto insurance and get reimbursed, and we don’t want to do that with healthcare. If we’re going to outlaw discrimination based on pre-existing conditions, the only way to keep people from gaming the system and raising costs on everyone else is to ensure that everyone takes responsibility for their own health insurance.”
Experience has subsequently shown that even with Obamacare’s unprecedented individual mandate in effect, this “gaming” and those “double digit premium increases” have occurred.
What would “different pre-existing conditions protections that don’t raise premiums as much” look like? Hudson Institute’s “An Alternative to Obamacare,” which I authored, describes such commonsense protections as follows:
“First, no one should be dropped from their existing health insurance, or have their premiums or other costs increased, on the basis of a health condition….
“Second, there should be a one-year buy-in-period for young adults who are looking to buy health insurance on their own for the first time, during which time they would be exempted from paying more…due to preexisting conditions….
“Third, parents should be granted a similar one-year buy-in-period for newborns, during which time they couldn’t be denied insurance for their child, or be charged more, because the child was born with, or had quickly acquired, a preexisting condition….
“Fourth…[those] who have maintained continuous employer-sponsored coverage (for a period of at least a year), but then lose access to that coverage, should be able to transition to a plan in the individual market—one of their own choosing—without paying higher premiums because of a preexisting condition. They should have a two-month grace-period between the time they leave a job…and the time they buy insurance through the individual market, during which time this protection would apply….
“Fifth…those who have remained continuously insured in the individual market (again, for at least a year) could switch to a different plan—either with their existing insurer or another—that provides the same, or a lower, level of coverage (with such classifications to be determined by the states), without paying more because of a preexisting condition….
“Sixth, $7.5 billion a year (with a 3 percent annual increase following year-1) in federal funding should be allotted for state-run “high risk” pools….No one could be denied affordable coverage through such high-risk pooling, no matter how unhealthy he or she might be.”
Such commonsense provisions would give Americans preexisting-conditions protections that don’t send premiums through the roof. The McLaughlin & Associates polling suggests that this is what Americans want.
About the author:
*Jeffrey H. Anderson, Senior Fellow at the Hudson Institute. Before moving to Hudson, Anderson co-founded the 2017 Project with William Kristol and ran it as Executive Director throughout its nearly two-and-a-half-year run (from early 2013 through the summer of 2015).
This article was published by the Hudson Institute