Monday, May 25, 2015

Health Insurers Asking for Hefty Premium Increases in 2016

Readers of this blog know that we forecast significant premium increases from 2016 to 2018 as insurers begin to feel the full impact of: 
  1. Adverse selection in the Exchanges (death spiral); and 
  2. The phasing out of the taxpayer funded transfer payments to insurers under the "Three R's Program" (insurer bailouts).  
It looks like the severe increases are underway. This is from the Wall Street Journal
Major insurers in some states are proposing hefty rate boosts for plans sold under the federal health law, setting the stage for an intense debate this summer over the law’s impact. 
In New Mexico, market leader Health Care Service Corp. is asking for an average jump of 51.6% in premiums for 2016. The biggest insurer in Tennessee, BlueCross BlueShield of Tennessee, has requested an average 36.3% increase. 
In Maryland, market leader CareFirst BlueCross BlueShield wants to raise rates 30.4% across its products. Moda Health, the largest insurer on the Oregon health exchange, seeks an average boost of around 25%. 
All of them cite high medical costs incurred by people newly enrolled under the Affordable Care Act. 
Under that law, insurers file proposed rates to their local regulator and, in most cases, to the federal government. Some states have begun making the filings public, as they prepare to review the requests in coming weeks. The federal government is due to release its rate filings in early June. 
Insurance regulators in many states can force carriers to scale back requests they can’t justify. The Obama administration can ask insurers seeking increases of 10% or more to explain themselves, but cannot force them to cut rates. Rates will become final by the fall. 
“After state and consumer rate review, final rates often decrease significantly,” said Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, the federal agency overseeing the health law. ...
Insurers say their proposed rates reflect the revenue they need to pay claims, now that they have had time to analyze their experience with the law’s requirement that they offer the same rates to everyone—regardless of medical history. ...