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Reports of Obamacare's implosion are greatly exaggerated

Anti-Trump Activists March To Trump Tower In New York Photo by Kevin Hagen/Getty Images

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Donald Trump has, in recent weeks, laid out a vision of Republicans in Congress not actually needing to repeal Obamacare. Instead, the law will simply collapse on itself.

"The best thing we can do, politically speaking, is let Obamacare explode," he said in late March. "It's exploding right now."

He doubled down on the claim the next morning on Twitter: "ObamaCare will explode and we will all get together and piece together a great healthcare plan for THE PEOPLE. Do not worry!"

Since he made these comments in late March, new data has come out making a convincing case that Obamacare's marketplaces aren't exploding — and that, as recently as last fall, they were actually stabilizing.

Kaiser Family Foundation put out new data this morning analyzing individual market performance for the past five years. Insurers did take a hit in 2014, the year Obamacare started. You can see on this chart that their earnings fell precipitously and, in 2015, insurers showed significant losses.

But 2016 was the year things seemed to turn around. Insurers climbed out of the red and showed a $13.54 per member profit.

Separate research from S&P Global finds similar results. They focused on the Blue Cross Blue Shield plans, nonprofit insurers that have come to dominate the Obamacare marketplaces.

S&P looks at something called the medical loss ratio, which is a measure of how much insurers are bringing in as premiums versus how much they are paying out as medical claims. If you have a medical loss ratio of 120 percent, it means you are spending $120 in medical bills for every $100 in premiums. But, perhaps more importantly, it means you are running a health insurance company hemorrhaging money that may soon go out of business.

The Blues plans had some pretty terrible loss ratios in 2014. The plan in Arizona, for example, had a 105 percent loss ratio. Vermont was at 104.5 percent.

But 2016 looks a lot different. The Arizona plan had a 90.1 percent loss ratio, and Vermont is down to 95.4 percent. The analysts at S&P say this shows "that the ACA individual market is not in a 'death spiral.'"

The Obamacare marketplaces aren't in collapse. But they still face challenges. The S&P report shows that there are still a handful of plans on the Obamacare marketplace that had medical loss ratios above 100 percent in 2016. This helps explain why rates went up a lot last open enrollment; it was these insurers trying to make sure that the premiums they charged could cover the medical bills.

There are areas of the marketplace — largely those that are rural with small populations — that are at risk of having zero health insurers in the marketplace next year. I wrote about those places earlier this week in VoxCare.

Those places are a challenge for the law — especially because Obamacare does not have any back-up plan. But even with those weak spots, the general trend with the marketplaces is toward stability. Insurers seem to be figuring out how to set premiums in the new marketplace at a level that will cover their medical bills.

If there is any uncertainty, it is in part manufactured by the Trump administration. The White House has stayed mum on key policy decisions, and that has insurers skittish about signing on for another year of marketplace coverage. Obamacare's marketplaces weren't on the path to explosion when Trump took office. But the president could easily push them in that direction.

Most health plans stick around Virginia marketplace

Big insurers Anthem and Aetna will continue selling on the Virginia marketplace in 2018, new filings with the State Corporation Commission show. UnitedHealth, however, will leave the marketplace.

Virginia has an unusually early deadline for health plans to file their 2018 plans. Most other states don't require insurance filings until the early summer.

While the Virginia plans have submitted notice that they will sell Obamacare coverage in 2018, they have not yet submitted their premium rates. Those aren't due until May 3.

Chart of the Day: Medical marijuana laws decrease prescriptions filled by Medicaid patients

Health Affairs

Researchers at the University of Georgia find that Medicaid patients use fewer prescription drugs in states with medical marijuana. They estimate that what seems to be patients substituting marijuana for prescriptions could have saved the public program $1 billion annually in 2014.

Kliff's Notes

With research help from Caitlin Davis

  • "Lawmakers revisiting requiring those on Medicaid to work" “In a break from past federal policy, the Health and Human Services Department under Secretary Tom Price has already notified governors it stands ready to approve state waivers for "meritorious" programs that encourage work. Separately, an amendment to the still-stuck House GOP health care bill would allow individual states to require work or training for adults, with exceptions such as pregnant women, or parents of a disabled child. Yet a surprising number of working-age adults with Medicaid are already employed. Nearly 60 percent work either full- or part-time, mainly for employers that don't offer health insurance, says the nonpartisan Kaiser Family Foundation.” —Ricardo Alonso-Zaldivar, Associated Press
  • "Conservatives’ Goal To Relax Mandatory Health Benefits Unlikely To Tame Premiums" “‘The insurance mandates are a primary driver of [premium] spikes,’” wrote Meadows and Sen. Ted Cruz (R-Texas) in an op-ed in March. But do those benefits drive increases in premiums? And would eliminating the requirement really bring premiums down? Health analysts and economists say probably not — at least not in the way conservatives are hoping. ‘I don’t know what they’re thinking they’re going to pull out of this pie,’ said Rebekah Bayram, a principal consulting actuary at the benefits consulting firm Milliman.” —Julie Rovner, Kaiser Health News
  • "A New G.O.P. Health Proposal Evokes the Old Days" “In the days before Obamacare, applying for health insurance meant filling out dozens of pages of forms and submitting medical records. It was almost impossible to compare prices. Your premium might be set higher for a large number of reasons, including if your child was overweight. This could be the future in some states under the latest Republican proposal to overhaul the health law.” —Margot Sanger-Katz, The New York Times

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