You are here

Insurers Seek Double-Digit Affordable Care Hikes

Rates will likely come down, Obama administration says

Health insurers are asking federal and state regulators to sign off on double-digit rate hikes for hundreds of plans under the Patient Protection and Affordable Care Act (PPACA) next year –– increases that are being driven by skyrocketing drug costs and better data on how healthy or sick their customers are, according to a report on the Politico website.

On June 1, the Obama administration posted proposed premium hikes from a wide range of carriers (including Blue Cross and Blue Shield plans), and their rate requests provide a preview of what insurers expect for the 2016 enrollment season, Politico says.

With some insurer hikes of more than 20%, the Obama administration quickly responded to concerns about out-of-control insurance costs and insisted that the proposals will likely come down.

“These specific rates will be subject to vigorous rate review and revision,” Andy Slavitt, acting administrator of the Centers for Medicare & Medicaid Services, said in a statement.

Insurers cited increased medical costs, particularly drug expenses, as a primary driver of the proposed increases. In addition, PPACA programs designed to entice insurers into joining the marketplaces by protecting them from financial risk are starting to be phased out, meaning that companies are directly bearing more of the costs of covering exchange customers.

Moreover, the data don’t include proposed rates in many states with their own exchanges. Most notably, California and New York rates are still not available.

Some health plans, particularly Blue Cross and Blue Shield carriers, are seeking major hikes. The Blue plans all want increases of at least 30 percent, Politico reports.

The Blue plan in Illinois is requesting a 23.4% average rate hike for individual plans, including a 29.1% increase for an HMO product covering 330,000 people. The Illinois plan justifies the latter request by pointing out that claims outpaced premiums by nearly $300 million in 2014, the first year of exchange operations.

“The rate review process kicks off an important set of steps designed to provide consumers and others the opportunity to weigh in on proposed rate increases of 10 percent or more,” Slavitt said. “The final rates consumers will see this fall will reflect the breadth of choice and competition in the marketplace.”

Even if rates go up significantly, it doesn’t necessarily follow that plans become more expensive for most consumers, Politico notes. That’s because more than 80% percent of exchange customers qualified for PPACA subsidies this year, which are tied to income available to households with incomes up to 400% of the federal poverty level.

Hovering over the rate-setting season is the King v. Burwell lawsuit currently before the Supreme Court. If the justices rule against the Obama administration, millions of residents in at least 34 states that haven’t established their own exchanges could lose access to the subsidies. A ruling is expected by the end of June.

The proposed 2016 rates largely don’t account for the possibility that subsidies could be eliminated, which would throw the insurance markets into chaos, Politico warns.

Source: Politico; June 1, 2015.

Recent Headlines

First New Medication for Seizure Clusters in More Than Two Decades
Novel, Low-cost Device Highly Accurate at Screening Newborn Jaundice
Mode Delivers Antivirals Safely, Cheaply to Remote Regions
First Devices Cleared for Diagnostic Testing Via Throat, Rectum Specimens
Averts Disease Worsening, Reduces Potential for Blindness
Risk May Remain for 6 Months After Treatment
FDA Removes Boxed Warning With Drug’s Fifth Approval
Overeager Use of Recommendations Creates Problems
Artificial Intelligence Enables Platform to Detect Amyloid PET Status