With two years of claims history under their belts, Obamacare insurance providers are proposing rate increases for 2016. Experts expect insurance rates to climb substantially – as much as 70 percent – in light of the fact that there have been more older enrollees in the plans than younger, healthier ones as the Obama administration predicted while selling the program to the American public.
In the two years since Obamacare took effect, insurers have had to base their policy prices on speculation as to who would enroll in Obamacare plans. Now, experts believe premium rates will accelerate faster within the next year than in they did in the two previous years. The insurance industry bases its future rates upon the number of claims it has historically paid. Had the participants in the program tended to be younger and healthier, insurers could have priced the plans lower. In practice, though, young healthy policy buyers have failed to participate in the program. In fact, nearly half the participants were older than age 44, according to final enrollment figures provided by the Obama administration. Older participants mean higher premiums.
The Affordable Care Act requires insurers to publish proposed rate increases well ahead of their implementation.
Plans and rates vary by state, but a look at rate increases published Monday on the Obamacare website, healthcare.gov, indicates increases of10 to 30 percent in many states. Some other states plan even bigger hikes. Blue Cross, for example, wants to raise its “platinum” plan in the State of Alabama by 71 percent next year. One Georgia provider, Time Insurance, is proposing a 64 percent hike for one individual plan and Aetna, another provider, wants to charge 59 percent more for a small group plan in Virginia.
Oregon, published rates for 23 plans, indicating they want to bump up the price next year by 10 percent or more. North Dakota, on the other hand, has just three plans that want to raise rates in excess of 10 percent.
Political controversy over the healthcare law is bound to explode, as Republicans have long predicted that Obamacare would cause rampant growth in healthcare costs rather than a dramatic lowering of premiums.
Insurers also point to higher prescription drug costs as culprits in the rising premium costs. The national group that represents insurance companies quickly defended the price hikes Monday. Clare Krusing, spokeswoman for American’s Health Insurance Plans, said there are many reasons for the increases, including taxes, fees, and necessary changes to old plans that do not comply with Obamacare’s rules.
“Premiums cannot be viewed in isolation,” Krusing said. “It’s critical to look at the individual market dynamics that impact how much consumers pay for their health care coverage and the factors, like provider consolidation and exploding prescription drug prices, that drive up premiums across the country.
Meanwhile, Americans wait for the other shoe to drop.
The Supreme Court is slated to make a decision later this month in the case of King v. Burwell, which could compound the problem of healthcare costs by blocking insurance subsidies in a majority of the states.
Challengers to the ACA, Affordable Care Act, contend that the law allows for subsidies only by way of state-run exchanges. Furthermore, they say the regulation implemented by the Internal Revenue Service providing for subsidies in both state-run exchanges and those exchanges created by the federal government are illegal exceeding the authority granted by Congress. If the high court rules against the Obama administration, nearly 90 percent of the people currently participating in the federal exchanges will see their premiums soar because their subsidies, which were designed to make the premiums more affordable, would be revoked.
Proposed policy rates must first be okayed by State Insurance Commissioners before they can take effect.