Health insurance companies are laying the groundwork for substantial increases in ObamaCare premiums, opening up a line of attack for Republicans in a presidential election year.
Many insurers have been losing money on the ObamaCare marketplaces, in part because they set their premiums too low when the plans started in 2014. The companies are now expected to seek substantial price increases.
“There are absolutely some carriers that are going to have to come in with some pretty significant price hikes to make up for the underpricing that they did before,” said Sabrina Corlette, a professor at Georgetown University’s Center on Health Insurance Reforms, while noting that the final picture remains unclear.
Insurers are already making the case for premium increases, pointing to a pool of enrollees that is smaller, sicker and costlier than they expected.
The Blue Cross Blue Shield Association released a widely publicized report last month that said new enrollees under ObamaCare had 22 percent higher medical costs than people who received coverage through their employers.
“The industry is clearly setting the stage for bigger premium increases in 2017,” said Larry Levitt, an expert on the health law at the Kaiser Family Foundation.
The proposals for premium increases, which will be rolled out over the next couple of months, still have to be approved by state insurance commissioners. The ultimate impact on consumers will be hard to determine, as ObamaCare’s tax credits often soften the blow.
“Companies are either going to have to raise their prices significantly or drop out,” said Sen. John Barrasso (R-Wyo.), pointing to a poll from NPR that found a quarter of the public says the health law has personally hurt them.
“UnitedHealth has announced it is pulling out of the Obamacare exchanges,” one Senator wrote in a statement. “That’s the latest in a string of Obamacare failures that have led to American families losing their doctors, having few or no insurance options, and facing skyrocketing premiums and deductibles.”
“In almost every year I remember since 2013 started, there were projections of double-digit premium [increases] that turned out not to be correct,” said Chris Jennings, a former Obama White House adviser on healthcare reform. “Now, do I believe this year may be a little bit different? I think it could be.”
About 15 percent of ObamaCare enrollees do not receive a tax credit, so they would bear the full burden of price hikes, though they, like other enrollees, can shop around for the best deal.
State regulators may be forced to approve some hefty rate increases for next year, given the need for insurers to stop losing money.
*Modified from Hill.com, IBD.com, WSJ.com articles, and other online sources.