ObamaCare uncertainty driving premium hikes

ObamaCare uncertainty driving premium hikes
© Getty Images

Uncertainty among insurers about how the Trump administration will handle the Affordable Care Act could translate into double-digit premium increases for 2018.

Insurers are beginning to file rate requests with state insurance regulators, and some states could see premium increases of 50 percent or more.

Insurers are worried about how President Trump’s plans for -ObamaCare — particularly whether the requirement for individuals to buy insurance will remain and whether insurer subsidies for covering low-income enrollees will continue.

“It’s a significant factor in pricing this year,” said Cynthia Cox, a health insurance expert with the Kaiser Family Foundation.

“I think it’s fair to say these rates are higher than we would have expected to see in the absence of uncertainty.”

Insurers also blamed rate increases on an unbalanced risk pool — which means there are too many sick, expensive patients and not enough healthy ones — higher claims for medical care and drugs, and the reinstatement of an -ObamaCare tax on health insurers.

Maryland’s largest health insurer, CareFirst BlueCross BlueShield, is proposing an average rate increase of more than 50 percent.

In a statement, CareFirst said the “lack of clarity” about whether the individual mandate would be enforced played a “significant role” in its proposed rate increases.

“Failure to enforce the Individual Mandate makes it far more likely that healthier, younger individuals will drop coverage and drive up the cost for everyone else,” CareFirst said in a statement.

The company is also requesting premium increases of 35 percent in Virginia and 29 percent in Washington, D.C.

Another Maryland insurer, Evergreen Health, is requesting rate increases of 27 percent, blaming uncertainty about -the ObamaCare insurer payments and the enforcement of the individual mandate as the “primary driver.”

In Connecticut, Anthem is requesting an average premium increase of 34 percent for plans on the -ObamaCare exchanges. The state’s other exchange insurer, CTCare, is requesting a 15 percent increase.

Rate requests must be reviewed and approved by state regulators and can often change.

Connecticut and Maryland both have earlier filing deadlines than most other states, which align more closely with the federal deadline of June.

Still, these states have been a good indicator of how insurers in other states will set their premiums, Cox said.

Because -ObamaCare subsidies are designed to increase as premiums go up, the people most affected by rate hikes would be those with higher incomes getting insurance through the exchanges and people getting insurance in the individual market.

It is difficult for insurers to price plans when they don’t know what will happen to -ObamaCare next year.

Trump himself has threatened to let -ObamaCare fall apart amid the uncertainty

In Congress, the House passed replacement healthcare legislation last week. But it’s unclear what action the Senate will take, and there have been some signals that the Trump administration will work to stabilize insurance markets. The Department of Health and Human Services last month finalized an insurer-friendly rule to try to coax companies into staying in the market.

“Insurers don’t really know which to believe. They don’t know whether to believe the signs Congress and the administration will work to stabilize the market in the short term or to believe the signs they will work to destroy the market,” Cox said.

In California, insurance commissioner Dave Jones, a Democrat, asked insurers to file two sets of rates: “Trump rates” and “ACA rates” in light of the “market instability created by President Trump’s continued undermining of the Affordable Care Act,” his office said in a press release.

Insurers could hike their rates even more if the Trump administration decides not to continue the insurer reimbursement payments.

The administration has said it hasn’t made any decisions on making the payments past May, but several insurers have already filed proposed rates based on the assumption that the payments will continue.

If they don’t, rates for -ObamaCare’s mid-range silver plans could go up another 20 percent, according to an April analysis from the Kaiser Family Foundation.

CareFirst said it would have to revisit its rate proposal “to make up for the loss of the subsidies,” noting that there has been “no clear guidance” on whether the reimbursements would be funded.

“The administration is leaving considerable uncertainty as to what’s going to happen next year,” said Dan Mendelson, president of Avalere, a healthcare consulting firm.

“The [cost-sharing reduction] money is currently a significant political football that’s going back and forth, and that kind of uncertainty kills markets.”

Republicans are in a tricky spot when it comes to the payments. The House GOP sued the Obama administration over the subsidies, arguing they were being made unconstitutionally.

That lawsuit is still playing out.

But if Republicans decide not to fund the payments, they could be blamed for a collapsing insurance market. If they continue the payments, they could then be accused of trying to help -ObamaCare, a law they have railed against for seven years.

Meanwhile, the uncertainty surrounding the markets has driven some insurers out entirely. Insurers like Humana and Aetna have bailed, leaving holes in counties in Iowa and Tennessee.

BlueCross BlueShield of Tennessee said today it would likely fill the gap left by Humana’s exit in the state. But it warned that premiums could be higher because of “the potential negative effects of federal legislative and/or regulatory changes,” referring to the insurer subsidies and what happens to the individual mandate.