Obamacare Premiums Are Set to Rise. Thank Policy Uncertainty.
(NY Timess) — Insurers are making final decisions about their Obamacare rates for next year. So far, it looks as if many of them will be building in an uncertainty tax.
The Kaiser Family Foundation has compiled proposed insurance prices for coverage in 21 large American cities next year. The rates remain subject to change as insurers and regulators continue to negotiate. But the Kaiser researchers have done similar analyses over the last few years and found the proposed rates to be roughly predictive of the national trend.
Two themes stick out: One is that, while insurance premiums will rise substantially in many cities, the increases are generally not bigger than they were last year. The other is that insurers are being quite explicit about citing the Trump administration’s hostile policy messages as a substantial reason for the higher prices.
In many states, insurers have said that they are asking for higher prices because they assume the White House won’t enforce the Affordable Care Act’s individual mandate, its rule that people who can afford it must buy insurance or pay a tax penalty. The carriers are also worried that the government will stop paying them cost-sharing reduction subsidies, payments that are the subject of a lawsuit between the executive branch and the House, and which the president has repeatedly threatened to halt.
The insurers don’t agree how big the uncertainty tax should be, but in some cases it’s hefty. CareFirst BlueChoice in Virginia, for example, says worries about mandate enforcement have led it to increase rates by 20 percent. Its overall rate increase proposal is 21.5 percent.
PacificSource Health Plans in Idaho has tacked on a 23.2 percent increase over concern the cost-sharing reduction subsidies won’t be paid, part of a 45.6 percent rate increase request. Other plans have picked smaller numbers. Premera Blue Cross in Washington, D.C., says it thinks that a weakly enforced mandate would increase prices by 4 percent, and that unpaid subsidies would lift them by 3.1 percent.
“The actuaries don’t really have a model for predicting how the Trump administration will act, so, to some extent, the insurance companies are really guessing,” said Cynthia Cox, an associate director at the Kaiser foundation and an author of the study.
Like other recent research, the new study suggests that many of the Obamacare markets had started to stabilize after their rocky starts and steep price increases this year. While a few places will experience big price increases for the popular benchmark plan in 2018, some of the proposed increases are more modest. The biggest would be in Wilmington, Del., where Highmark has proposed an increase of 49 percent. Proposed premiums would actually fall by five percentage points in Providence, R.I., and would stay flat in Burlington, Vt. But most of the markets Kaiser examined will experience double-digit rate increases if the proposed increases are approved.
The increases are not just about Mr. Trump and policy uncertainty. Insurers are also raising rates for the reasons they usually do. Health care costs are expected to go up in 2018, as they do every year. And an Obamacare tax on health insurance plans that was temporarily postponed is scheduled to kick in next year.
The sticker price of insurance matters to a minority of Americans. Only about 10 percent of Americans buy their own insurance, and most of those receive government subsidies that shield them from price increases. Kaiser estimates that in most of the places where prices are going up, the amount people with subsidies will pay for insurance will go down. Still, hefty premium increases are a big pocketbook hit to those Americans who are ineligible for subsidies. And they are a good indication of the health of the Obamacare market, which Mr. Trump frequently assails as failing or dying.
The study looked at only one city in each state, and cities tend to be the places where Obamacare works best, because of larger populations and more choices of doctors and hospitals. Many of the most expensive and shaky markets tend to be in rural areas. It will take time before we know what their prices will be. But there are still a few rural counties with no insurer willing to offer coverage next year.
The proposed rates aren’t yet final. Regulators in some states may force them lower — or, in rare cases, higher. And insurance companies could have some flexibility to make last-minute changes if policy certainty emerges soon. Insurers still have several weeks to decide if they wish to exit Obamacare’s markets for next year altogether.
After failing to pass a big health care overhaul bill last month, congressional leaders have begun discussing possible steps to stabilize the Obamacare markets, steps that could calm insurer worries and cause more to stick around. But Ms. Cox is skeptical that such action would have a big impact on next year’s prices. Insurers are locked into a process of rate calculations and approvals that make it hard for them to change their prices substantially at this point.
“It’s getting to be very late in the game for there to be changes to premiums,” she said.