Insurance Commissioners Say Obamacare's Individual Market Near Collapse, Not Sustainable

Commissioner says market is unstable because of Obamacare's foundational flaw of top-down government intervention
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September 6, 2017

Insurance commissioners told lawmakers Wednesday that Obamacare's individual market is near collapse as premiums continue to rise and health insurers flee the marketplace.

At a Senate Committee on Health, Education, Labor and Pensions hearing, two insurance commissioners from Oklahoma and Tennessee explained how the Affordable Care Act has negatively impacted health care in their states and offered ways to stabilize the market.

John Doak, the insurance commissioner in Oklahoma, said the effect of Obamacare on his state's individual market has been severe. Doak said competition has declined dramatically as there were five insurers operating in 2014, and now there is only one. There were 30,000 individuals who left the non-group market because they could not afford it, as premiums have increased 130 percent in the last four years. There was one insurer in Oklahoma that incurred losses of more than $300 million.

"Oklahoma is facing the collapse of our individual health insurance market," Doak said. "I have opposed the type of top-down federal intrusion into our health insurance markets we have experienced with the ACA because this system removes the traditional understanding of health insurance as a transfer of risk."

"What we have now in our individual market is the consequence of encumbering a functional market with the burdens of becoming a federal tax distribution system," he said.

The insurance commissioner from Tennessee, Julie Mix McPeak, cited similar concerns.

McPeak said last year that the Obamacare individual market was "very near collapse." While she said the market hasn't collapsed yet, it isn't any more stable than it was at that time. McPeak says that in 2010 there were about a dozen health insurers offering coverage, and now they are down to one insurer.

"I don’t think that many people believe that having a single choice in 78 of 95 counties represents ideal market competition," McPeak said. "To summarize Tennessee's experience over the last four years, our consumers have seen premium prices skyrocket while their plan choices have diminished."

"Tennessee's current ACA trajectory quite simply is not sustainable," she said.

McPeak said one way to stabilize the market and reduce premiums is by funding the cost-sharing reduction payments through 2018. The payments were put into question when House committees suggested they were unconstitutional because they were made without an appropriation from Congress. Now there is a pending lawsuit surrounding them.

"There is still potentially time for the Congress and administration to provide stability to health insurance markets across the country by agreeing to fund CSR payments at least through the 2018 plan year," she said. "Such a stability measure could result in an immediate reduction in proposed premium rates for 2018 following coordination between the states and CMS."

Oklahoma's insurance commissioner said, however, that premiums were rising even when the cost-sharing reduction payments were being made.

"It should be noted that the instability in Oklahoma’s market, the spike in premiums, the rise in deductible levels, and the constriction of networks have all occurred while CSR payments were being made to insurers," Doak said. "While the nonpayment of CSRs would exacerbate Oklahoma’s numerous individual market problems, CSRs are not the source of those problems."

"Oklahoma’s market instability is the result of the ACA’s foundational flaw: It is a top-down federal government intervention into health insurance regulation that distorts natural, cost-controlling market forces and stifles innovation in a sector in need of new ideas," he said.

Other reforms that the insurance commissioners suggested included growing risk pools with healthy individuals, rolling back regulations, increasing price transparency, and eliminating Obamacare's mandates and taxes.

"Congress should repeal all fees and taxes that increase the price of health insurance, including the Patient-Centered Outcomes Research Institute (PCORI) fees, the Health Insurance Tax (HIT), and FFM user fees," Doak said. "Second, Congress should repeal the individual and employer mandates and replace them with a meaningful continuous coverage premium discount or a surcharge and waiting period for interrupted coverage."

"Congress should look beyond health insurance and adopt a series of proposals that would help reduce the cost of health care and give individuals more control over their health care dollars," he said. "We should expand the use of health savings accounts to allow people to choose more affordable high-deductible health plans, work to address the skyrocketing cost of prescription drugs in America, and support transparency in pricing for the delivery of medical services."