President Obama Blames Employers and Insurers for Increasing Health Care Costs, Strongly Defends The ACA

October 21, 2016

With individuals facing an average 25 percent increase in the cost of Affordable Care Act exchange plans in 2017 and employers expecting a 5 percent cost increase in their plans, President Obama said: "It's not because of Obamacare—it’s because of your employer or your insurer," and called on Congress to improve the law next year.  The President said in a speech this week that "for most Americans, the Affordable Care Act … has not affected your coverage—except to make it stronger," and that Americans' concerns over increasing co-pays and changing provider networks stem from "decisions that are made by your employers… even though sometimes they try to blame Obamacare for why the rates go up.  It's not because of any policy of the Affordable Care Act that the rates are going up."  The President went on to strongly defend parts of the ACA which are helping drive the cost increases, including free preventive care benefits, annual caps on out-of-pocket costs, and other benefit mandates.  Tevi Troy, CEO of the American Health Policy Institute, responded, "As the American Health Policy Institute's landmark 2014 study on the costs of the ACA to large employers demonstrated, the ACA is both directly and indirectly increasing the cost of employer-provided health care.  These costs, imposed via a variety of provisions, do have a real impact on the cost of employer-sponsored health care."  The price of ACA plans in some states will jump by 50 to 75 percent in 2017 because, according to the President, insurers initially set their prices too low, more older and sicker individuals than expected were enrolling in exchange plans, and insurers have little competition in some states.  To solve the problem, the President called on those states which have not expanded Medicaid to do so, and for Congress to provide more tax credits to middle-income families and individuals, and to create a public option to increase competition.  Separately, HHS estimates 13.8 million people will enroll in ACA exchange plans in 2017, an increase of 1.1 million over the number of people who enrolled in 2016.  However, S&P Global Ratings forecasts "modest-to-negative growth” for the ACA exchanges that "is clearly a bump in the road."