OPINION

Obamacare hits consumers with a triple-whammy

Sally Pipes

Consumers shopping for coverage on Obamacare’s exchanges recently discovered what even the law’s most committed defenders have warned about — health insurance premiums are going up.

Premiums are up by an average of 22 percent on plans available during the current open enrollment period — which ends on Jan. 31. In the 39 states using the federal exchange, rates have gone up by a quarter. In Arizona, they’ve more than doubled. Premiums are up an average of 59 percent in Minnesota, 58 percent in Alabama, and 53 percent in Pennsylvania.

Typically, plans with higher premiums feature lower deductibles. But not under Obamacare. Next year, exchange customers will pay those higher premiums for the privilege of spending thousands of dollars toward an annual deductible — before their coverage even kicks in.

Obamacare has turned the health insurance market on its head. High premiums and high deductibles now buy low-quality plans that limit consumers’ choices of doctors and hospitals.

Next year, the average deductible for a bronze-level exchange plan — the least comprehensive — will be a whopping $6,092 for individuals and well over $12,000 for families. That’s the amount customers must pay out-of-pocket before the insurer starts picking up the tab.

High deductibles aren’t necessarily bad, of course. In the health insurance market, young, healthy people might find high deductibles attractive, because they’re unlikely to incur many medical expenses. They just want low-cost protection in the event of a catastrophe.

But that’s not the deal the exchanges are offering. Despite rising deductibles, bronze-level premiums will rise an average of more than 28 percent in 2017, according to a recent analysis of 24 metropolitan areas.

Consider an exchange enrollee in Phoenix. Before the health law took effect, the median-priced plan for a 30-year-old nonsmoker cost a little over $1,000 a year and came with a $5,000 deductible.

Next year, the cheapest exchange plan available in Phoenix costs $4,748.40 a year and comes with a $6,800 deductible. Even worse, it’s an HMO policy — so it restricts patients to a narrow network of doctors and hospitals. Any care sought outside of the network must be paid for out-of-pocket, and that money doesn’t count towards the plan’s deductible.

In other words, these individuals face the prospect of paying $11,548 in healthcare costs — before they can even access their skimpy HMO benefits.

Consumers typically accept HMOs’ narrower provider networks in exchange for lower premiums. But again, Obamacare’s not even giving them a choice. In order to make up for some of the massive losses they’ve suffered on the exchanges, insurers have made limited provider networks a standard feature of their marketplace plans.

This triple-whammy of higher premiums, higher deductibles, and narrow provider networks is a function of Obamacare’s onerous insurance mandates. The health law prohibits insurers from turning away patients based on their health status. It also puts strict limits on how much coverage providers can raise prices for older, sicker patients. Insurers can’t charge their oldest customers more than three times what they charge their younger, healthier ones.

At the same time, Obamacare demands that all exchange plans cover a host of treatments and services, from pediatric dental care to speech-language pathology. In the face of such mandates, higher premiums, higher deductibles, and restrictive provider networks are among the only options available for insurers to keep costs down.

Many people would gladly pay higher deductibles or comply with narrow provider networks in order to escape high premiums. Unfortunately, as they’re learning this open-enrollment season, under Obamacare they have to accept all three — or nothing.

Sally Pipes, author of “The Way Out of Obamacare,” is president, CEO, and Thomas W. Smith Fellow in health care policy at the Pacific Research Institute.