Get ready for the next round of ObamaCare price spikes

posted at 2:41 pm on May 15, 2014 by Ed Morrissey

Let’s start with this video, in which KMOV continues investigate the billion-dollar contract awarded by HHS that apparently solved more Pictionary puzzles than processed applications. After their first report, KMOV heard from a number of Serco employees validating the initial whistleblower — who updated Chris Nagus and Dan Greenwald to say that nothing had changed since. One former employee told Nagus on a Skype call that spending seven months doing nothing all day long made her wonder about her own sanity, but more so about the program’s sanity. A supervisor told her in December — when the approaching date of disruption of existing insured would hit — that their goal was to process one or two applications … for the month:

“I think for the entire month of December I processed six applications and that was pretty good,” Lavonne said.

Lavonne said her output in December was good because other employees told News 4 the goal was to process even fewer applications.

“Our supervisor said if we process one or two of these a month we have done our job,” one employee said.

Lavonne said they had to come up with ways to pass the time. Employees told News 4 workers are not allowed to bring in a cell phone, pen, or paper.

“We played Pictionary on a very dry erase board,” Lavonne said. “We played 20 questions, we made up games what you did in 1989.”

Employees also told News 4 boredom reigned because of the lack of work and the restrictions on what workers could bring into the office.

“You could be completely sane and work there for seven months and leave there and want to check yourself into a mental hospital it was that bad,” Lavonne said.

That’s just the entree for today’s post, though. In my column for The Fiscal Times, I look at analysis of insurer filings from Virginia and Washington for premium changes in 2015. The numbers show that consumers had better expect another big spike in costs:

Rate-proposal filings in the state of Washington show the four largest insurers proposing average increases across their plans ranging from 8.1 percent to 11.2 percent in a single year. Jonathan Wu of Value Penguin analyzed the proposals and concluded that the insurers tried betting on success, and came up short. “What is troubling about the data is that among these insurers, there is clearly an issue with the premiums offered in the first enrollment period,” Wu writes. Noting that the four companies offered the lowest prices in the market this year, their enrollment numbers are not surprising, but their consumers may get a less-pleasant surprise by the end of the year.

In Virginia, two insurers control 86 percent of the market, and both propose steep increases in 2015 premiums. Anthem, which has 113,614 of the roughly 170,000 enrollments, wants to boost prices by an average of 8.5 percent next year, while CareFirst wants a hike of 14.9 percent. All five insurers in the Virginia exchange want price hikes, with only Kaiser’s proposal falling below an 8.5 percent increase. If the Obamacare experience in these two states provides any indication, Wu writes, “then consumers might need to brace themselves for rate hikes in the coming months.” … 

That brings us to the group-insurance market, where most Americans get their health insurance. Shortly after the passage of the Affordable Care Act, the Department of Health and Human Services produced an analysis that predicted the employer mandates and increased costs would force “66 percent of small employer plans and 45 percent of large employer plans” to be canceled. That was the “mid-range” estimate, one that went unnoticed until the mass cancellations of plans in the individual market.

As Forbes’ Avik Roy argued at the time, it meant that the churn in the individual market provided just an appetizer to the main course of market disruption that will come this fall.

The extent that insurers can limit those price hikes will come at the expense of your “choice habit,” as one wag spun it earlier this week. Now that people have begun to access their insurance for medical care, they’re discovering what we’ve noted for months — that the provider networks have narrowed dramatically, no matter what level of coverage they selected:

Before the law took effect, experts warned that narrow networks could impact patient’s access to care, especially in cheaper plans. But with insurance cards now in hand, consumers are finding their access limited across all price ranges.

The dilemma undercuts President Obama’s 2009 pledge that: “If you like your doctor, you will be able to keep your doctor, period.” Consumer frustration over losing doctors comes as the Obama administration is still celebrating a victory with more than 8 million enrollees in its first year.

Narrow networks are part of the economic trade-off for keeping premiums under control and preventing insurers from turning away those with pre-existing conditions. Even before the Affordable Care Act, doctors and hospitals would choose to leave a network — or be pushed out — over reimbursement issues as insurers tried to contain costs. …

Insurance agents Craig Gussin in San Diego and Kelly Fristoe in Texas helped dozens of clients switch plans just before the enrollment deadline when clients realized their doctors weren’t covered. Now, they’re struggling to help clients who realized they were in that position after the March 31 enrollment deadline, when consumers are locked into plans for one year.

Gussin says that even after his mad-dash to make switches before the deadline, he still has a half-dozen clients who are stuck — and he expects the number to grow as more try to schedule with doctors. He and other agents fear it will be one of their most serious issues in 2014.

“Everybody I talk to is having the same issue. It’s probably the number one item that we’re seeing right now,” said Gussin, who is petitioning Covered California for special enrollment status to help clients change plans.

Oddly, Americans didn’t have that much trouble satisfying their “choice habit” before the Obama administration decided to make health care “affordable.” Investors Business Daily says it’s time to admit that ObamaCare is working — just as its critics predicted:

High and rising premiums. Runaway costs. Rampant waste. Workers shoved into government-run exchanges. That’s what critics said would happen should ObamaCare remain the law of the land.

And on every point, these critics were viciously attacked by the White House and its amen chorus in the press. But on each, the critics are being proved right while the law’s backers try to change the subject.

Warnings of ObamaCare rate shocks were a big myth, we were told — merely “scare tactics” used to gin up opposition to the law by Republicans.

Then the first year’s rates came out last fall, and they were far higher than pre-ObamaCare premiums in most states, often even after taxpayer subsidies.

The rate shocks continue. IBD reported this week that two states are proposing rate hikes topping 8% for their 2015 ObamaCare premiums. In Virginia, CareFirst Blue Choice proposed a nearly 15% increase.

According to one insurer, poorer health of enrollees plus ObamaCare taxes and fees are largely to blame.

Nevada insurance brokers, meanwhile, see premium hikes of 35% to 120% for small businesses renewing plans this year, the Las Vegas Review Journal reports.

And a recent analysis by Avalere Health concluded that “double digit premium increases are likely in many markets” for next year.

But at least we’re kicking our “choice habits.”


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