Category: Affordability

A new report from the Kaiser Family Foundation says the cost of the “benchmark” plan (the second-lowest-cost silver plan in a market, which is the price used to calculate subsidies) will go up 10 percent this year, double the rate at which prices increased last year. The lowest-cost silver plans are also seeing substantial hikes. This matters because these are the most frequently purchased plans.

The usual caveat applies to these preliminary requests: Regulators might not approve them. But that caveat was hauled out last year by the law’s supporters, who seemed to think that this was simply the opening stage of a negotiation in which insurers asked for the stars in the hope of settling on the moon. In fact, regulators approved large rate hikes, and the state of Oregon actually made some insurers raise rates by more than they’d planned.

. . .

While it will be months before insurers and regulators agree to final rates for the coming year, a new Kaiser Family Foundation analysis confirms the signals we have seen from industry and government experts — that consumers and the federal government are likely to see much higher prices in many markets. Clearly, insurers are struggling to figure out how much to charge so they can cover their costs but still attract customers.

As health care reporters, we’ve been debating exactly how worried one should be about the fate of the Affordable Care Act, known informally as Obamacare, in the face of steep rate increases next year.

. . .

The White House is urging states to be more aggressive against health insurance companies as it looks to prevent expected and widespread premium hikes of 10 percent or more this year.

The federal health department announced Wednesday that it will dole out about $22 million to boost state-level “rate reviews,” considered one of the strongest weapons against premium increases.

Under the system, health insurers are required to justify rate increases to state insurance departments, some of which have the power to reject “unreasonable” increases. With the new funding, federal health officials hope states can hire outside insurance experts to dig deeper into the proposed rates and prove the hikes are unjustified.

. . .

Next year’s premiums for health coverage under the Affordable Care Act could rise more than in past years in most markets and declines might be rare, according to a preliminary analysis of insurers’ plans.

Overall, premiums for a popular type of plan — the second-lowest silver plan — could rise 10 percent on average next year in 14 major metropolitan areas, according to an analysis released Wednesday by the Kaiser Family Foundation. Kaiser based its projections on insurers’ preliminary rates filed with state regulators, which remain subject to state or federal review. (KHN is an editorially independent program of the foundation.)

Last year, premiums for the second-lowest silver plan in those metro areas rose 5 percent after state insurance departments signed off, Kaiser said.

. . .

More than half of the states have disclosed just how much higher their health care premiums could be next year under the Affordable Care Act, and some of the potential increases are jaw-dropping.

But Illinois residents won’t get their first look at proposed 2017 premiums until Aug. 1, and that has consumer advocates frustrated.

Insurance companies had to submit rate plans for Illinois in April, but the state doesn’t require the proposals to be made public upon filing, according to the Department of Insurance. In addition, the director of the department considers health plan filings confidential and exempt from Freedom of Information requests.

. . .

Many people contend that we should not worry about the premium rate shock because the ACA insulates most people from gross premiums. The oft-repeated idea is that the ACA basically requires only that people pay a percentage of their income in premiums. So, unless income goes up, a person’s net premium stays the same.

Reporters, pundits and bloggers should stop accepting or repeating this contention. Gross premium increases can matter a lot.

It is true that if you earn less than 400% of the applicable federal poverty level AND you purchased the second lowest silver plan the year before AND you continue to purchase the second lowest silver plan the following year, then your net premiums don’t go up even if the gross premium rises astronomically.

. . .

Millions of people who pay the full cost of their health insurance will face the sting of rising premiums next year, with no financial help from government subsidies.

Renewal notices bearing the bad news will go out this fall, just as the presidential election is in the homestretch.

“I don’t know if I could swallow another 30 or 40 percent without severely cutting into other things I’m trying to do, like retirement savings or reducing debt,” said Bob Byrnes, of Blaine, Minnesota, a Twin Cities suburb. His monthly premium of $524 is already about 50 percent more than he was paying in 2015, and he has a higher deductible.

. . .

The Geisinger Health Plan foresees health costs rising 7.5% next year, but requested a 40% rate increase. The plan, which is run by one of the nation’s top-rated health organizations, underestimated the cost of covering the newly insured under ObamaCare. “Our rates for Medicare, Medicaid and employer-sponsored insurance have been relatively stable, but those products have to bear the cost of our losses on exchange business,” Kurt Wrobel, Geisinger’s chief actuary, said. Many insurers are struggling to find the best ways of providing care to their new customers as they prepare for the fourth year of coverage under ObamaCare.

Obamacare supporters will say that increasing premiums don’t matter because anyone getting a subsidy has their premium share capped and they are therefore insulated from these prices and the follow-on big rate increases. The worst that can happen to them is that they will have to shop for a lower cost plan.

Those shoppers may well have to settle for plans with bigger deductibles and narrower networks to keep their premiums flat.

But the bigger thing this argument is missing is that half of the individual market does not get a subsidy in order to buy Obamacare health plans. The CBO has estimated that in 2017 both on and off the exchanges 12 million will get subsidies and 12 million won’t.

. . .

Insurance companies participating in Delaware’s health insurance exchange under the Affordable Care Act are seeking average rate increases of about 24 percent or more for next year, state officials revealed Thursday in acknowledging the potential sticker shock for consumers.

In a rate filing with the Delaware Department of Insurance, Highmark Blue Cross Blue Shield of Delaware is asking for an average rate increase of 32.5 percent for individual plans. Rate increases would vary by plan and would range from 24.1 percent to 35.8 percent.

. . .