Insurance industry expert Bob Laszewski says the conventional wisdom about Obamacare, that it will be stable after one or two more years of “catch-up” rate hikes, is wrong. It’s wrong because those rate hikes make Obamacare less and less appealing to the portion of the market that is expected to pay full price for plans with small networks and huge deductibles. From Lazewski’s piece at Forbes:
With one state after another announcing big 2017 Obamacare rate increases the latest refrain from Obamacare supporters is that with maybe one or two more years of rate increases everything will be fine.
Talk about missing the forest for the trees.
The latest example is in North Carolina where market leader Blue Cross, the biggest insurer with 330,000 people covered, is asking for an 18.8% 2017 rate increase. Aetna, with 130,000 customers is asking for 24.5%.
Laszewski looks at the current plans for sale in North Carolina. For a family of four the cheapest bronze plan was $980 a month with a $13,700 deductible. For an individual (male, age 40), the cheapest bronze plan was $328 a month with a $6,850 deductible. While it’s true that many enrolled in Obamacare will get subsidies that cover the bulk of the cost of those premiums, that’s not true for everyone:
The CBO has estimated that in 2017 both on and off the exchanges 12 million will get subsidies and 12 million won’t. Half the market has to pay these full prices and the new rate increases to boot.
These plans may continue to look like a bargain to the people who get nearly all of their premiums covered by subsidies but what about everyone else:
The lowest cost Bronze plan this family can buy already costs $980 and Blue Cross has said it will go up again––(to well over $1,150 a month based upon their announced average 18.8% increase) and it already has a $13,700 deductible.
Goodness, this family already pays $11,760 a year for a plan with a $13,700 deductible and it could go up to $13,971 in premium next year based upon the 18% rate increase.
Who is going to want to pay that kind of money for that kind of plan?