If you work for a small business, your next health insurance premium may give you sticker shock.
Many of the small-business and individual insurance policies are working the health reform law’s 2014 fees into their 2013 bills, contributing to double-digit premium increases for some people.
All those new consumer benefits packed into the health reform law — birth control without a co-pay, free preventive care and limits on when insurers can turn down a customer — had to be paid for somehow.
So the law’s drafters included a new tax on health insurers, starting at $8 billion in 2014 and increasing to $14 billion within four years, to help meet the new expenses. And insurers in 2014 will also have to pay a “reinsurance contribution” to cushion health plans that end up with a lot of sick customers under new rules requiring them to cover people with pre-existing conditions.
Some health insurance companies are getting a jump-start, passing on those 2014 fees to consumers in policies that start in 2013. While insurance rates have been going up for years — and not all of the new increases can be pinned to the health law — the hikes will certainly give more fuel to Obamacare critics.
- Insurers say they have no choice but to increase premiums to cover those costs. But it’s hitting pocketbooks sooner than some people expected, and that’s causing controversy.
Everyone, even many of the law’s supporters, admit premiums are going to go up under the health law — although many people will get subsidies to help pay for coverage. Many of the costs — and the priciest benefits — were pushed beyond the 2012 election to 2014. But if the public revolts when they see 10 percent,15 percent or 20 percent rate hikes, already shaky support for the health law could suffer.
That means there’s a lot at stake for insurance companies and the law’s supporters when consumers see their health insurance bills. The law’s backers have a history of using steep rate increases to garner public support for health reform — and against insurers. One turning point that helped the law’s passage was when Democrats blasted a 39 percent rate increase requested by Anthem Blue Cross in California in early 2010.
Now, insurers are being proactive, arguing the health law is driving the increase in prices.
- “There’s a massive new health insurance tax that starts in 2014,” said Robert Zirkelbach, a spokesman for industry group America’s Health Insurance Plans. “For policies that are sold in 2013 and extend into next year, there’s going to be taxes imposed. … As a result, like all taxes, they will be reflected in premiums charged.”
But insurers are already getting in trouble with at least one state insurance commissioner. California Insurance Commissioner Dave Jones said this week that Anthem Blue Cross is “unlawfully” including the 2014 fees in its 2013 rates.
“California state law requires that premiums bear a relationship to the insurance sold to a particular customer,” Jones told POLITICO. “In this case, what’s happening is that Anthem Blue Cross is collecting from customers … a fee that Anthem Blue Cross doesn’t have to pay until 2014.”
Anthem spokeswoman Kristin Binns said the company has to collect the fees in yearlong policies that start in 2013 because they’ll extend into 2014. And the fee is prorated in a customer’s premium so they’re paying for only the 2014 part of the policy.
Jones said that doesn’t make it right. “They should wait until 2014 to do it.” Anthem’s not alone. A review of rate filings posted on a website managed by the Department of Health and Human Services shows many insurers are charging 2014 fees in new policies and renewals issued in 2013.
Premiums for small group policies from CareFirst BlueChoice in the District will rise an average of 11.8 percent after April 1.
The price of an Aetna small group plan in Illinois will jump 13 percent in 2013 and 16.5 percent in Pennsylvania. A small group policy from Anthem in Connecticut will increase 13.8 percent this year, too. All of those plans said in their filings that the 2014 health reform law fees account for at least a portion of the price spikes .
The health insurance tax is going to have the largest impact. It is expected to increase premiums by about 1.9 percent to 2.3 percent in 2014, according to a study by Oliver Wyman that has been touted by the insurance industry.
Insurance giant Aetna said in its rate filings that the tax on health insurers accounts for 1 percent of its proposed premium increase, and the reinsurance fee accounts for 0.5 percent. Several insurers also said the new preventive care requirements, such as birth control coverage without a co-pay, contribute to their new rates. And they point to medical costs, which are increasing more slowly than they used to but still faster than the overall economy is growing.
CareFirst BlueCross BlueShield spokesman Michael Sullivan said the fee increases in its policies will be prorated for the portion of the yearlong policy that extends into 2014. He called it a “fairly common industry practice.” “The approach that we’re taking here is making sure that the share of those things we have to pay in 2014 is reflected in the premiums,” Sullivan said.
* Modified from an article by By JENNIFER HABERKORN | 1/11/13