qotd: Why are the media celebrating a 7.5% ACA premium increase?

CMS.gov
October 26, 2015
2016 Marketplace Affordability Snapshot

The 2016 Affordability Snapshot provides a review of the final rate
increases for second lowest cost silver plans, known as benchmark plans,
which will be available for purchase in the 37 states that used the
HealthCare.gov platform in 2015, including those in the
Federally-facilitated Marketplace, State Partnership Marketplaces, and
supported State-based Marketplaces.

Across all 37 states that used the HealthCare.gov platform, the cost of
the benchmark plan will increase on average 7.5 percent in 2016. These
increases do not take into account advanced payments of premium tax
credits, which lower the monthly costs for the overwhelming majority of
Marketplace consumers.

The second-lowest cost silver plan is notable because it serves as the
benchmark plan to calculate the amount of advanced premium tax credit
consumers may be eligible for to help lower the cost of their
Marketplace coverage.

https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-10-26-2.html

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U.S. Bureau of Labor Statistics
October 15, 2015
Consumer Price Index Summary

Consumer Price Index for All Urban Consumers (CPI-U)

Percent changes, Unadjusted 12 months ended September 2015

0.0% All items

1.9% All items less food and energy

2.4% Medical care services

2.7% Medical care commodities

http://www.bls.gov/news.release/cpi.nr0.htm

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Comment by Don McCanne

Although there are many variables that produce a wide variation in
premiums for plans offered in the health insurance exchanges
(Marketplaces), the second lowest cost plans in the silver tier serve as
the benchmark for premium tax credits and thus can provide an anchor for
determining health care inflation as reflected by the premiums for the
plans offered by the exchanges.

Many reports in the media today are celebrating the fact that average
increases in the benchmark premiums were held to a single digit. But
these increases in insurance premiums were about 5% greater than the
consumer price index (CPI-U) increases for medical care services and
commodities, and a 7.5% increase over CPI-U for all items.

Our health care financing system that has been heavily dependent on
private insurance plans has been ineffective in slowing health care
inflation to sustainable levels. The Affordable Care Act was supposed to
have made health care more affordable by creating a separate competitive
market of regulated private plans within government-operated insurance
exchanges. With a 7.5% increase above the CPI-U, we can say that this
experiment with private health plans has been failure.

If we want affordable health care for all, we need to eliminate the
private insurers and establish a single payer national health program.
As Fareed Zakaria said last week, "It's absolutely clear that is the
only way you can achieve that goal."