Fact Check: Will health insurance premiums really keep going up?

“If we do nothing, premiums will go far, far, far higher than they would otherwise go up… . I think they’ll go down once this system comes into place.”- House Speaker Paul D. Ryan, R-Wis., interview on CBS’s “Face the Nation,” March 12, 2017

“The numbers that I’ve seen in the first glance is that the CBO says that premiums will go down by at least 10 percent with this plan.”- White House budget director Mick Mulvaney, remarks to reporters, March 13

“The best thing that is happening with the health care is premiums will come down.”- President Trump, interview with Bloomberg News, May 1

“The premiums are going to be low, the deductibles are going to be low.”- Trump, interview with the Economist, May 4

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Advocates for the House Republicans’ health-care overhaul plan frequently say or suggest that premiums would go down under the proposal. There is, in fact, a line in the Congressional Budget Office report on the American Health Care Act that, at first glance, might suggest premiums will decline by 10 percent.

But, as we have frequently explained, the reference in the report is compared to current law – the Affordable Care Act. What CBO does is measure the impact of a proposed law against a current law baseline. So average premiums by 2026 are projected to be rougher 10 percent lower than the baseline for the Affordable Care Act – but they still would go up.

The CBO does not actually give a figure for the average premium – which would not be very helpful anyway, because premiums depend so much on age, geographic location and other factors. The CBO assessment of the American Health Care Act also does not detail the premium baseline that it relied on, but the Fact Checker was able to calculate it through a reference in a 2016 CBO report.

We then used that baseline to calculate the increase in premiums for a single policyholder at three different ages over the 10-year period detailed in the CBO assessment. In all three age groups, premiums go up by 2026. For younger Americans, the increase is at a much slower rate, while it soars for older Americans.

CBO does not provide quite enough data to produce a year-by-year chart. If it did, you would see dramatic changes in premiums in the 2019-2020 period. That’s when the ACA’s age ban, which limits the premiums of older Americans to no more than three times the cost paid by younger Americans, would be changed to a 5-to-1 ratio under the GOP plan. So a more complete chart would show a drop in 2020 premium prices for 21-year-olds and a big spike for 64-year-olds. Still, even 21-year-olds would experience higher premiums by 2026.

One key reason for the lower average premium in 2026, compared to current law, is that older Americans increasingly would be priced out of the market, resulting in a younger, healthier mix of policyholders.

These figures do not include the impact of tax credits or subsidies in both laws, though the CBO said the payments are less generous under the AHCA, which would tend to make it harder for people to afford insurance.

It’s also important to remember that the health-care plans in the ACA and the AHCA are not necessarily comparable. The AHCA would repeal a requirement that plans in the individual and small-group markets have an actuarial value – the percentage of total costs for covered benefits paid by the plan – in one of four tiers: about 60 percent, 70 percent, 80 percent or 90 percent. So, in theory, a health insurer could offer plans that cover less than 60 percent of total costs, which would bring down premiums but also increase deductibles and other cost-sharing payments. The AHCA, as passed in the House, would give states the option to alter the health plans even more, but CBO has not scored that yet.