2017 Is Looking Like a Good Year for Health Insurers—If Republicans Don’t Ruin It

Michael Hiltzik points me to some new data from the Kaiser Family Foundation about Obamacare. A picture is worth a thousand words, so here’s a chart that shows how insurers are doing in the individual insurance market:

This is the result of the big increase in premiums in 2016. Claims went up only 5 percent, a little less than normal, but average premiums went up 20 percent. The result is a big increase in gross profits per customer and a big increase in overall profit margins. This is pretty much what most analysts predicted: insurers lowballed their premiums in 2013 and saw their profit margins fall over the next two years. That improved a bit in 2016, and then improved a lot in 2017 following the large premium increases.

In other words, the big premium increases of last year weren’t a sign of Obamacare failing. They were a sign that insurers had learned more about the market and needed a one-time increase to return themselves to profitability. If there’s another big premium increase this year, it won’t be because nobody is making money in the Obamacare market. It will be due to deliberate destabilization of the market by Donald Trump and congressional Republicans.

However, there’s a downside in this data: Obamacare has attracted a sicker pool of customers. Between 2011 and 2014, average hospital days increased about 1.8 percent per year. Since then, they’ve increased 4.6 percent per year. This isn’t surprising since Obamacare required insurers to cover everyone, not just the healthy, but it does indicate that insurers really are dealing with a more expensive set of customers and needed a few years to figure just how much more expensive they were going to be.

Note that all of this data is from the first quarter of 2017, and is being compared to the first quarter of previous years. Apples to apples. Obviously we’ll have to wait six months to get full-year data through 2017.

FACT:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and the wealthy wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2019 demands.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

We have a new comment system! We are now using Coral, from Vox Media, for comments on all new articles. We'd love your feedback.