O-Care premiums to skyrocket

Health industry officials say ObamaCare-related premiums will double in some parts of the country, countering claims recently made by the administration. The expected rate hikes will be announced in the coming months, and the sticker shock would likely hamper ObamaCare insurance enrollment efforts in 2015.

The industry complaints come less than a week after Health and Human Services (HHS) Secretary Kathleen Sebelius sought to downplay concerns about rising premiums in the healthcare sector. She told lawmakers rates would increase in 2015 but grow more slowly than in the past. “The increases are far less significant than what they were prior to the Affordable Care Act,” the secretary said in testimony before the House Ways and Means Committee.

  • Her comment baffled insurance officials, who said it runs counter to the industry’s consensus about next year. “It’s pretty shortsighted because I think everybody knows that the way the exchange has rolled out … is going to lead to higher costs,” said one senior insurance executive who requested anonymity.

The insurance official, who hails from a populous swing state, said his company expects to triple its rates next year on the ObamaCare exchange. The hikes are expected to vary substantially by region, state and carrier.

Areas of the country with older, sicker or smaller populations are likely to be hit hardest, while others might not see substantial increases at all.

Much will depend on how firms are coping with the healthcare law’s raft of new fees and regulatory restrictions, according to another industry official.

  • Some insurers initially underpriced their policies to begin with, expecting to raise rates in the second year. But insurance officials are quick to emphasize that any spikes would be a consequence of delays and changes in ObamaCare’s rollout.

They point out that the administration, after a massive public outcry, eased their policies to allow people to keep their old health plans. That kept some healthy people in place, instead of making them jump into the new exchanges.

  • Perhaps most important, insurers have been disappointed that young people only make up about one-quarter of the enrollees in plans through the insurance exchanges, according to public figures that were released earlier this year. That ratio might change in the weeks ahead because the administration anticipates many more people in their 20s and 30s will sign up close to the March 31 enrollment deadline. Many insurers, however, don’t share that optimism

“We’re exasperated,” said the senior insurance official. “All of these major delays on very significant portions of the law are going to change what it’s going to cost.”

  • “My gut tells me that, for some people, these increases will be significant,” said Bill Hoagland, a former executive at Cigna and current senior vice president at the Bipartisan Policy Center. Hoagland said Sebelius was seeking to “soften up the American public” to the likelihood that premiums will rise, despite promises to the contrary.

Insurers will begin the process this spring by filing their rate proposals with state officials. Insurance commissioners will then release the rates sometime this summer, usually when they’re approved. Insurers could also leak their rates earlier as a political statement.

Jon Gruber, who also helped design the Affordable Care Act, said, “The bottom line is that we just don’t know. Premiums were rising 7 to 10 percent a year before the law. So the question is whether we will see a continuation of that sort of single digit increase, or whether it will be larger.”

In Iowa, rates are expected to rise 100 percent on the exchange and by double digits on the larger, employer-based market, according to a recent article in the Business Record.

*Modified from a Hill.com article

No comments yet.

Leave a Reply