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Did the White House not see big Obamacare premium hike coming?

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Posted at 10:28 PM, Oct 26, 2016
and last updated 2016-10-26 22:28:02-04

The official numbers out this week on how much more Obamacare premiums for many will cost this coming year stunned people from coast to coast.

Obamacare premiums are set to skyrocket an average of 22% for the benchmark silver plan in 2017, according to a government report released Monday.

Obamacare premiums are set to skyrocket an average of 22% for the benchmark silver plan in 2017, according to a government report released Monday.

In Arizona, for example, the average hike will be 116%, while the national average will be 22%.

The spikes spawned a fresh storm of criticism from Republicans who, feeling vindicated, labeled Obamacare a “disaster” and a “trainwreck.”

But why the element of surprise? Isn’t this something the Obama administration, with all of its projections and analysis, could have seen coming?

Similar questions were also asked surrounding the trouble-plagued launch of the Affordable Care Act back in 2013, when the flood of enrollees crashed government servers.

But those are questions that White House Press Secretary Josh Earnest wouldn’t answer despite repeated inquiries from reporters this week.

A senior administration official in the Department of Health and Human Services, however, painted a fuller picture of the problem.

Given that this coming year will see the end of two government programs that helped insurance companies offset a chunk of their risk, the administration knew costs would likely rise.

To be sure, it’s a complicated landscape out there. States have different laws and policies. Ten states opted to expand Medicaid coverage, and in each one, average premiums for 2017 will not rise more than 7%. Indiana will see a drop of 3%.

Here’s what happened:

According to a senior official, the administration started getting a sense of how much insurance companies were going to hike prices last spring. Also, it had the projections from the Congressional Budget Office, which overall were mostly accurate about where the premiums are now.

The surprise? That some states are seeing much higher hikes.

The administration attributes that to several factors, including that too few young, healthy people are signing up to offset the expenses of the needier patients.

But one official said insurance companies also initially priced their offerings too low.

“An honest miscalculation,” the official believes, of who they’d be insuring and how sick they were.

At the same time, companies were willing to absorb losses in those first years of the program to bring more people in. Now, not so much.

But it’s not only insurance companies administration officials point to — they also blame Republicans.

“Playing politics” and even “sabotage” is how Earnest described their actions toward the health care system.

The White House would like to see Congress take up a “public option” — a government-run insurance company that would compete with the others — and expand tax credits to help people with higher costs. They’d also like more states to expand Medicaid.

Many Republicans have refused and vowed to eventually repeal and replace what they consider a flawed system from the start.

The good news for the administration is next year, two-and-a-half million more Americans will be eligible for tax credits, which 85% of enrollees already get, to completely offset the premium hikes.

By the HHS’s calculation, of the approximately 10.5 million current enrollees in Obamacare, about 1.3 million will actually feel the rate hikes.