When UnitedHealth announced their decision to withdraw from most ObamaCare markets, critics warned that it portended another round of sharp price spikes on premiums in the individual-plan marketplace. The Obama administration shrugged UnitedHealth off as a minor player and claimed that it wouldn’t change the markets for 2017. Guess who turned out to be correct? Oh, let’s not always see the same hands:
Health insurance companies are laying the groundwork for substantial increases in ObamaCare premiums, opening up a line of attack for Republicans in a presidential election year.
Many insurers have been losing money on the ObamaCare marketplaces, in part because they set their premiums too low when the plans started in 2014. The companies are now expected to seek substantial price increases.
“There are absolutely some carriers that are going to have to come in with some pretty significant price hikes to make up for the underpricing that they did before,” said Sabrina Corlette, a professor at Georgetown University’s Center on Health Insurance Reforms, while noting that the final picture remains unclear.
Old and busted: Nothing will happen! New hotness: Taxpayers will pick up the cost increases!
The proposals for premium increases, which will be rolled out over the next couple of months, still have to be approved by state insurance commissioners. The ultimate impact on consumers will be hard to determine, as ObamaCare’s tax credits often soften the blow.
Er, they “soften the blow” by pulling money out of other people’s pockets. Republicans warned at the time ObamaCare passed that insurers would end up having to hike premiums repeatedly in order to deal with sharp increases in utilization under the ACA, and that it would create a skyrocketing burden in subsidies. Those earning 400% of the poverty line or lower can get some level of subsidies in order to keep health insurance from eating up more than 9.5% of their income. The more premiums rise, the higher those subsidies go — and the more that the taxes built into ObamaCare will fall short in covering those costs. Democrats claimed that ObamaCare would be deficit neutral in its first decade. The subsidy spiral has demonstrated that claim to be utterly false.
Of course, the insurers have to get approval for premium rate increases from state governments, and they will be under considerable pressure to reject those requests. The problem now, though, is that other insurers will follow UnitedHealth out of the markets, and those companies insure many more consumers than UnitedHealth. The solution may be to convince insurers to raise the deductibles even more than their current absurdly high levels, which avoids the subsidy spiral but makes the mandate even more of a joke. The bronze plans already have an average deductible of over $5000, money that has to get spent by consumers on top of premiums before their insurance even takes effect. If that moves to $6000 or higher, then consumers will conclude that insurance is useless to carry until they actually get sick — the “free rider” dynamic that has already plagued the ObamaCare markets:
Other insurers also have criticized exchange enrollment rules for people who sign up outside the annual “enrollment window” — in other words, beyond the sign-up deadline.
The ACA allows customers to buy coverage outside the standard time frame if they lose a job, get divorced or have a child, among other reasons. But insurers want the federal government to take a closer look at such people, to find out whether some of them truly qualify for exemption from the time rules.
The law established an enrollment window, officially known as an open enrollment period, to prevent people from simply waiting until they became sick before they bought insurance. But insurers say it has become too easy for customers to sign up past the proper deadline.
I wonder what excuse HHS will have when this happens again next year?