Insurers cite uncertainty in filing ObamaCare rate hikes

Insurers cite uncertainty in filing ObamaCare rate hikes
© Getty Images

Insurers’ requests for premium increases in 2018 varied widely amid uncertainty surrounding how the Trump administration will implement ObamaCare, a new analysis finds.

The Kaiser Family Foundation analyzed initial premium requests from 21 major cities and found the rate requests ran the gamut from a 5 percent decrease in Providence, R.I., to a 49 percent increase in Wilmington, Del.

Some areas saw more modest increases or virtually no change. 

ADVERTISEMENT
Premiums generally wind up being similar or equal to insurers’ initial requests, but this year is different. It’s possible the rates could change, the analysis noted, as insurers still lack certainty about whether the federal government will continue critical payments to insurance companies or enforce the penalty for going without health coverage.

“We still would have seen premium increases in many of these states even without the political uncertainty," said Cynthia Cox, a co-author of the analysis and associate director for Kaiser's Program for the Study of Health Reform and Private Insurance.

"But if the Trump administration had been more clear about what the rules were going to be for next year, we would likely have seen much smaller premium increases,” she said.

The insurance plans took different approaches to crafting their rate requests. Some factored in the uncertain environment. Some states asked insurers to file two sets of rates, with the second including a big increase if the federal government discontinues payments to insurance companies known as cost-sharing reductions, which subsidize out-of-pockets costs for low-income customers.

“The vast majority of insurers included in this analysis cite uncertainty surrounding the individual mandate and/or cost sharing subsidies as a factor in their 2018 rates filings,” the new report states.

Insurers factoring in the possibility that the administration will not enforce ObamaCare’s individual mandate increased their rates an additional 1.2 to 20 percent. For those requests that factored in a discontinuation of cost-sharing reductions, insurers increased their initial rates another 2 to 23 percent, according to the report.

Even if premiums rise, many low-income enrollees would be cushioned from the spike. About 84 percent of those who get coverage in the exchanges receive tax credits from the federal government to help pay for health insurance, and that assistance rises when premiums do.

Key deadlines for the law are looming.

By Aug. 16, insurers selling plans on HealthCare.gov are supposed to finalize their rates. And on Sept. 27, insurers sign contracts and lock in their participation in the federal marketplace.

More insurance companies may decide to exit the ObamaCare exchanges if they don’t know by then how the law will be implemented.

“We're likely to see some insurers going back and asking for even higher premium increases from what they initially requested,” Cox said. “And if they don't get more clarity soon from Congress or from the administration, we may see more insurers exiting the market later this month or next month.”

In 20 states and Washington, D.C., an average of 4.6 insurers indicated their intention to participate in the marketplaces for plan year 2018, according to the analysis. Comparatively, 5.1 insurers participated per state in 2017.

Yet, as of Friday, 17 counties are at risk of having no insurers participate in their health exchanges, according to a Kaiser Family Foundation tracking tool. This would impact more than 9,500 enrollees.

Insurers want to know if Congress or the administration will fund cost-sharing reductions. They total about $7 billion for fiscal 2017, and the administration has been funding them on a monthly basis. 

The Department of Health and Human Services said the Kaiser analysis points to widespread problems in the healthcare law.

"This analysis confirms what we already knew — Obamacare is flawed, failing, and harming the American people," wrote HHS spokeswoman Alleigh Marré.

"Inaction is not an option. The Trump Administration is committed to repealing and replacing Obamacare and will always be focused on putting patients, families, and doctors, not Washington, in charge of healthcare."

On Capitol Hill, the Senate Health Committee will hold bipartisan hearings the first week in September in an effort to craft a short-term market stabilization bill both parties can agree on.

Sen. Lamar AlexanderAndrew (Lamar) Lamar AlexanderWeek ahead: Lawmakers near deal on children's health funding Ryan suggests room for bipartisanship on ObamaCare Time to end fiscal year foolishness MORE (R-Tenn.), the panel’s chairman, said any bill should fund the cost-sharing reductions, giving insurers certainty that Trump won’t abruptly halt them. A bill should also include “greater flexibility for states in approving health insurance polices,” Alexander said.

- This story was updated at 12:09 p.m.