The Department of Health and Human Services announced in a report on Monday that insurers are increasing their premiums by an average of 25 percent for plans offered on the Affordable Care Act's federal exchange in 2017. This report confirms what has been evident for some time: The ACA — a.k.a. Obamacare — is financially unstable just as many critics predicted it would be, and this instability is making the law more vulnerable politically, too.
The basic problem is that those who signed up for coverage in 2014, 2015, and 2016 were, on average, higher users of medical services than insurers anticipated. Consequently, the premiums they had been charged for coverage were far too low to cover their costs, and insurers incurred substantial losses. In 2014 alone, insurers lost about $2.7 billion from the plans they offered in the individual insurance market, and their losses almost certainly grew in 2015 and 2016.
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