May 4 2016
One News Now
featuring Hadley Heath
While many people are focused on the presidential campaigns, insurance companies are working on how big an increase they want in ObamaCare premiums.
Reasons for the financial difficulties vary, but most accounts involve insurance companies setting premiums too low in the early days of ObamaCare. Another issue is that many enrollees have been older, less-healthy Americans, and the number of younger, healthier enrollees hasn't been sufficient to help offset the cost.
Meanwhile, Forbes contributor Robert Book writes that that is due to the Affordable Care Act's mandate that people stay on their parents' insurance until they're 26 years of age. According to Book, that coverage is almost invariably priced lower.
Meanwhile, Hadley Heath Manning, director of health policy at the Independent Women's Forum, predicts 2017 could see a substantial jump in healthcare premiums.
"[It's] going to be a year where some insurance companies try to make up for the fact that they have been losing money or just breaking even in the exchanges – and they're certainly going to be asking for, in some cases, astronomical increases in premiums," she says.
"Now, of course, this is a negotiation, so the first numbers that we hear may be as high as 30, 40 percent in some markets with some insurers asking some state exchanges and state regulators to approve this kind of rate increases," she qualifies. "But the first numbers we hear are just opening bids from insurance companies."
State regulators will either say no, or they will work with health insurance companies to find a more reasonable increase to pass on to consumers. "If they can't come to an agreement," Manning adds, "we might see more insurers do what UnitedHealth did and announce that they're leaving those exchange marketplaces."
A similar situation in 2015 involved Blue Cross Blue Shield of New Mexico opting out of that state's exchange.
"We've seen that with a lot of different insurers," Manning notes, adding it is bigger news when UnitedHealth leaves more than 30 exchanges.
The Obama administration says talk of premium increases is premature and overblown. When it comes to premium increases in recent years, the administration has directed consumers to shop around, while touting taxpayer subsidies to help qualified individuals offset the cost of their exchange plan.
"They may have some legitimate points to make," says Manning, referring to talk of premium increases being overblown. "For one thing, the first time we hear about premium increases is usually when insurers are taking their request to state regulators, which sometimes get approved, sometimes get rejected, sometimes get negotiated."
But when it comes to taxpayer subsidies, Manning says the formulas in the exchange are such that taxpayers pick up the majority of the burden when it comes to those premium increases.
"There is a limit to how much consumers can pay according to their income in the exchanges. So even though premiums may increase dramatically next year, that's going to hurt two groups of people the most," she explains.
"Number one, it's going to hurt unsubsidized customers very much because they will pay the full price of that increase. And number two, it's going to hurt taxpayers because we will make up the difference when it comes to the premium increases for subsidized customers."
Regardless, one thing is for certain: it's a news story that will be playing out over the next few months, as insurers and state regulators discuss premium increases for 2017.