Next Tuesday will be the start of open enrollment for Obamacare’s state exchanges, which offer health insurance to the 7 percent of Americans who buy their own coverage.
It’s an anxious moment for the program: Enrollment is expected to remain significantly less than originally hoped. Some insurers have pulled out of the exchanges altogether. And those that remain have boosted premiums for typical plans by an average of 25 percent.
These problems aren’t great enough to bring the exchanges down. Eighty-five percent of people who participate get federal subsidies, so they will have to pay little more than they did last year. Seventy-seven percent of current enrollees will still be able to buy coverage for $100 a month at most.
And in 45 states, more than one insurer will still offer policies. But rising prices and low participation, by insurers and customers alike, are problems that need to be addressed if the exchanges are to succeed.
The most important challenge is to attract more young (and generally healthy) people to the marketplace. Then, the risk to insurers would be spread more widely, making it less expensive to cover people with greater medical costs. People age 25 to 34 remain twice as likely to be uninsured as those age 45 to 64.
More young people could be attracted with more generous subsidies, lower caps on deductibles, or a stiffer penalty for going uninsured. (Currently, that penalty is $695 a year or more.) In many cases, it would help to better inform people that they’re eligible for financial help.
Another way to improve the exchanges would be to make insurers’ revenue somewhat more stable. The mix of people tends to shift rather drastically from one year to the next (and even one month to the next). This makes it difficult for insurers to anticipate their costs and, in turn, set reasonable premiums that allow them to stay in business.
The federal government has been reducing that risk by offering reinsurance, and by boosting payments to insurers for plans that lose money. But these efforts are scheduled to end by next year. They should be extended.
Also, people should no longer be permitted to enroll midway through the year, which encourages them to wait until they’re sick to buy coverage.
In those few states where too many insurers have already left the exchanges, people should be offered a public insurance option (an idea Hillary Clinton supports), or allowed to buy into Medicare. That wouldn’t hold costs down, but it would at least give every customer some amount of choice. The trick with this strategy -- and it’s a tough one -- would be to persuade Congress to carry it out.
In any case, what the exchanges need most is time. Consumers need more experience buying policies on the exchanges to better understand their options. And insurers need more years of claims data to better anticipate costs, and more experience insuring the exchange populations.
Indeed, this year’s higher prices have been necessary, in large part, because insurers initially underpriced their policies. The increases will bring premiums up to about they were originally expected to be in 2017. Future years are unlikely to see such significant increases.
Patience and a bit of tweaking are well worth the trouble when you consider what the exchanges have accomplished: providing insurance to some 13 million Americans, many of whom had none before, or who had policies that didn’t cover vital services, including mental health care and prescription drugs.
Consider, too, how well the other parts of Obamacare are working -- the expansion of Medicaid in most states; the rules allowing everyone to buy coverage, regardless of any existing illness, and the policy of letting young adults remain on their parents’ plans until age 26; and the efforts to get better value out of Medicare. More than 91 percent of Americans now have health insurance, up from 84 percent before the Affordable Care Act.
The exchanges have problems, it’s true. But they’re worth fixing to continue improving health security in the U.S.
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