2017 might see some of the highest premium increases since the passage of the Affordable Care Act (ACA) if recent headlines are any indication. A recent New York Times article starts with the headline “Fresh Problems for Obamacare”, Forbes leads with “Obamacare’s exchanges could soon be out of health insurers” and CNBC reports “Obamacare customers should brace for sticker shock”. If there was any hope that rates would stabilize, 2017 is not that time.
- Seven Indiana insurers have filed for increases seeking approval for premiums that range from 5.3% to 29%.
- BCBS of Texas, the state’s largest health insurer has filed for an average increase of nearly 60%
- BCBS of North Carolina has filed for an average increase of 18.8%.
But these states are not alone. With carriers experiencing significant financial losses on their Obamacare plans and lower than expected enrollment, they are either heading for the exits or raising premiums beyond the means of most individuals.
A recent review by Avalere Health of the first 9 states to report showed that average premium increases for the most popular plans ranged from 5 percent in Washington state to 44 percent in Vermont for an overall 16% average.
Besides lower than expected enrollment, the carriers are attracting customers that are sicker than they anticipated and 2016 marks the end of the ACA’s reinsurance program that was put in place to offset some of the losses incurred by the carrier’s sickest customers. This program had a 2016 expiration as the laws architects expected that the individual market on the exchanges would have stabilized by now.
While data continues to be submitted to regulators in other states, no one expects the initial filings that have already been submitted to be outliers. As in previous years, we are also seeing significant differences between states and within a state among insurers. The full picture will still take weeks as more states report but as a reminder – these are carrier requests and not the rates that have been approved by regulators. Before we get too optimistic, regulators will have a more difficult time this year in reducing carriers requests by any significant amount. With growing carrier losses and the use of exiting markets as a strategy, regulators hands may be tied.
Carriers are also making changes to what plans they offer as well. Consumers on the lowest-tier "Bronze" Plans could see some of the biggest jumps in prices. Based on preliminary filings, some insures are eliminating these Bronze Plans entirely or pricing them significantly higher as many of the sickest patients have gravitated to these plans. CareFirst BCBS in Virginia announced that it will eliminate all Bronze Plans and transition existing customers to the mid-tier Silver Plan – a 70% premium increase for these customers.
But there still remains a “silver lining” for a large subset of customers – those who are eligible for government subsidies or tax credits. While those customers that are subsidy eligible may be shielded from some of these price hikes, there still remain millions of Americans who are not eligible for these subsidies and get no protection. They will simply have to endure the full premium increases or risk being fined as the ACA requires every American to have health insurance.
The Obama Administration is dismissing the rate increases and stated that concerns about 2017 premiums are premature and overblown.
The Health and Human Services Department was further quoted as saying “the Texas rate request is just the beginning of a process. Consumers in Texas and other states will have lower-premium options when sign-up season begins Nov. 1. If they don't like what their current insurer is charging for 2017, they can switch”.
"Consumers will have the final word when they vote with their feet during open enrollment," said the statement.
But “voting with your feet” may not apply this time. With carriers exiting many markets, fewer plan options, skyrocketing rates and shrinking physician networks – consumers have limited places for their feet to take them.
Stay tuned as we continue to monitor these and other issues that impact consumers, brokers and agents.
The views expressed in this post do not necessarily reflect the official policy, position, or opinions of BenefitMall. This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.