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June 16 2016

Election Year Gambit: Obama Administration Fights to Delay Steep ObamaCare Premium Hikes

Patrice L. Onwuka

ObamaCare is about to get even more expensive, and President Obama wants to make sure we don't feel the pain until he's safely out of the Oval Office with a Democrat to succeed him.  To that end, he is pressuring states to hold increases at bay.

Health research juggernaut, the Kaiser Family Foundation, released a report  yesterday projecting steep premium increases for 2017. Premiums for the lowest-cost silver plan is expected to rise by 11 percent. However, the range of increases geographically is wide with a decrease of 14 percent in Providence, Rhode Island to a whopping 26-percent increase in Portland, Oregon. Historically, these ObamaCare plans have increased an average of 5 percent per year, which makes these projected increases severe.

The cost for the second-lowest silver plans are projected to increase by 10 percent on average compared to a 5 percent increase last year. Again, there will be substantial variances across the country, from a drop of 13 percent to an increase of 18 percent.

In addition, the report found that fewer insurers will participate in ObamaCare exchanges – limiting options for customers. This is largely due to the withdrawal of UnitedHealth as we’ve reported.

So, the White House announced that it will dole out $22 million to states for rate reviews. Under ObamaCare health insurers are required to justify rate increases above 10 percent to state insurance departments. The federal government has no authority to veto increases they consider unreasonable and only some states have the power to reject those increases. States like Connecticut and Maryland have strong-armed insurers to keep premiums down. On the other hand, Texas doesn’t have a rate review process, so the federal government “works” with insurers. We can guess whose interest they are representing.

State insurance review boards have their hands full after news came yesterday that we can expect double-digit premium increases. This comes at a bad time for Democrats seeking office and President Obama who is trying to salvage his namesake healthcare plan. Therefore, the White House went on the offensive. They are making millions available for state insurers to conducts rate reviews of the proposed hikes by insurers and trying to find the positives for companies in the exchanges. And they are moving quickly; the first notices of the premium increases are set to hit mailboxes just before the November election.

The Hill reports:

In the last week, federal health officials have already announced a plan to help stabilize the risk-sharing pool and hosted a conference in Washington, D.C., to help share "success stories" for companies that are staying afloat under the law.

Rate review, which was broadened under ObamaCare, is seen as an important tool for states battling to keep premiums low.

The expansion of that program, particularly on the federal level, has been strongly opposed by a major trade group for insurers, America’s Health Insurance Plans (AHIP). 

AHIP spokesman Clare Krusing said Wednesday she hadn't reviewed full details of the administration's plan but strongly warned against turning the program into "a political football."

“There are serious issues in the exchange right now that are not addressable by rate review,” Dan Mendelson, founder and CEO of Avalere Health, said in a recent interview.

Insurers will once again find themselves reaping the costs of making what they must have thought would be a lucrative bargain with President Obama. He promised a flood of new customers (with plenty of healthy young knuckleheads subsidizing the costs for older, sicker adults) and a steady flow of cash. Instead insurers received expensive higher-use patients and fewer young people to shoulder the burdens, which has forced these companies to eat up the added costs.

There will come a point when other insurers join UnitedHealth and bail out of ObamaCare. Even the pressure from regulators to artificially keep rates low will not be enough to swallow the losses from operating ObamaCare plans.

Customers may have a cushion, however: Washington is more than willing dole out larger subsidies to hide, when possible, the actual premium costs. And we, as taxpayers, will be on the hook for it all.

Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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