Insurers must submit applications by next Wednesday to sell plans through HealthCare.gov, and these will give us some of the first indicators of how high Obamacare costs will skyrocket in 2018. Obamacare supporters can’t wait to blame the coming premium increases on the “uncertainty” caused by President Trump. But insurers faced the same uncertainty last year under President Obama.
Consider a recent press release from California Insurance Commissioner Dave Jones. He announced that “in light of the market instability created by President Trump’s continued undermining of the Affordable Care Act,” he would authorize insurers to file two sets of proposed rates for 2018—“Trump rates” and “ACA rates.” Among other sources of uncertainty, Mr. Jones’s office cited the possibility that the Trump administration will end cost-sharing reduction payments.
Thus the uncertainty: The House filed a lawsuit in November 2014, alleging that the unauthorized payments were unconstitutional. Judge Rosemary Collyer ruled in the House’s favor and ordered a stop to the payments. As the Obama administration appealed the ruling, the cost-sharing reduction payments continued.
The House lawsuit and the potential for a new administration that could cut off the payments unilaterally should have been red flags for regulators when insurers were preparing their rate filings for 2017. I noted this in a blog post for the Journal last May.
To maintain a stable marketplace regardless of the uncertainty, regulators should have demanded that insurers price in a contingency margin for their 2017 rates. It appears that Mr. Jones’s office did not even consider doing so. I recently submitted a Freedom of Information Act request to his office requesting documents related to the 2017 rate-filing process, and “whether uncertainty surrounding the cost-sharing reduction payments was considered by the Commissioner’s office in determining rates for the current plan year.” Mr. Jones’s office replied that no such documents exist.
What does that mean? At best, not one of the California Insurance Commission’s nearly 1,400 employees thought to ask whether a federal court ruling stopping an estimated $7 billion to $10 billion in annual payments to insurers throughout the country would affect the state’s health-insurance market. At worst, Mr. Jones—a Democrat running for attorney general next year—deliberately ignored the issue to avoid exacerbating already-high premium increases that could have damaged Hillary Clinton’s fall campaign and consumers further down the road.
The California Insurance Commission is not alone in its “recent discovery” of uncertainty as a driver of premium increases. In April the left-liberal Center for American Progress published a paper claiming to quantify the “Trump uncertainty rate hike.” The center noted that the “mere possibility” of an end to cost-sharing payments would require insurers to raise premiums by hundreds of dollars a year.
Following insurers’ June 21 deadline, expect a raging blame game over next year’s premium increases. Conservatives shouldn’t hesitate to ask regulators and liberal advocates now pointing the finger at uncertainty where they were this time last year when the future of those payments was equally uncertain.
This post was originally published at The Wall Street Journal.