Iowa Insurance Commissioner Nick Gerhart appeared on CNBC yesterday to explain his decision to approve rate hikes as high as 42% in his state. Echoing comments made last week by Tennessee’s Insurance Commissioner, Gerhart said the Obamacare market was “troubling” as the result of “adverse selection.”
“This really is a math problem,” Gerhart said. “The carriers have had sustainable and large losses so our position is we have to look at the rates for adequacy for the carrier and affordability for the consumer as well,” he said. “It was a really tough decision and I hate to increase rates by 42.6 percent but it really had to happen for our market to be sustainable,” he added.
One of the CNBC hosts suggested the Obamacare marketplace was “broken.” Gerhart replied, “The risk mitigation tools, the three R’s, really didn’t work very well to be honest and the carriers just really need more predictability in the pricing to be honest, so it needs a lot of work.”
Asked what could be done to fix the program, Gerhart said, “Well, it’s a challenge. You need to have more people in. You need to have healthier folks in, you know, the young people are not buying product as it’s too expensive to be honest with you.” He added, “It’s adverse selection. Those people that are buying are a little more sick than the carriers priced in and it’s a real troubling market right now.”
Gerhart is not the first insurance commissioner to suggest Obamacare is in trouble. Last week Tennessee’s Julie Mix McPeak made national news when she said the market was “very near collapse.” She has since come under attack from state Democrats who have called for hearings to investigate large premium increases approved by McPeak.
Obamacare’s public fortunes have taken a dive since several of the country’s largest insurers—UnitedHealth, Humana and Aetna—announced they will be pulling out of most Obamacare markets next year. As a result, competition in the marketplace will be significantly reduced with 17% of Americans having only one insurer offering them a plan.
Here’s the interview with Gerhart:
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