Premiums will rise in 2015, says Sebelius

Premiums will rise in 2015 under ObamaCare, Health and Human Services Secretary Kathleen Sebelius said on Wednesday.

“I think premiums are likely to go up, but go up at a smaller pace than what we’ve seen since 2010,” Sebelius said in response to a question from Rep. Erik Paulsen (R-Minn.).

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“The increases are far less significant than what they were prior to the Affordable Care Act,” she said during testimony to the House Ways and Means Committee.

Average healthcare premiums for most consumers have been rising steadily for more than a decade, though the trend has slowed in recent years. Experts say it's too early to tell whether changes to the insurance market under ObamaCare are helping to bring down costs.

The open enrollment period for ObamaCare in 2014 doesn’t close until March 31, so insurers are still gathering data on new enrollees, and won’t be able to calculate 2015 premium rates for several more months.

But the system needs as many healthy enrollees as possible to maintain a balanced risk pool that keeps premiums from jumping in 2015.

The exchanges have so far attracted considerably more older consumers, who tend to be sicker and thus more expensive to cover. The HHS said Tuesday that only 25 percent of the 4.2 million who had signed up for ObamaCare coverage between October and February were between the ages of 18 and 34.

Experts disagree about what the proper ratio of young to old should be in the insurance pools, with some saying the administration is in good shape at 25 percent and others arguing it needs to be closer to 40 percent for the law to perform optimally. The administration originally forecast that 38.5 percent of total enrollees would be between 18 and 34.

Still, the Affordable Care Act has measures in place to keep premiums from spiking during the first two years of the law if not enough healthy people sign up.

ObamaCare creates a temporary pool of money, known as risk corridors, to pay insurers who enroll a higher-than-expected number of sick patients through 2016, and transfers the money from lower-risk plans to higher-risk plans to keep premium prices stable in the early stages of the law.

Proponents of the risk corridors say they are necessary to ensure stable pricing on the exchanges in case too few healthy people sign up during the early stages of the law. Republicans have introduced legislation to repeal the corridors, decrying them as a “bailout” for the insurance industry.

The White House’s 2015 budget proposes spending $5.5 billion next year for the program, but insists that it’s “revenue neutral.” At least some of the risk corridor payments will be funded by the insurers themselves, as the law requires companies with better-than-expected results to contribute to the pool.