(Bloomberg) — The Obama administration has said it expects premium increases for health insurance next year to be considerably slower than the pace before implementation of the Patient Protection and Affordable Care Act (PPACA). That’s not what insurance industry executives told the Hill:
Some insurers initially underpriced their policies to begin with, expecting to raise rates in the second year.
Others, especially in larger states, will continue to hold rates low in order to remain competitive.
But insurance officials are quick to emphasize that any spikes would be a consequence of delays and changes in ObamaCare’s rollout.
They point out that the administration, after a massive public outcry, eased their policies to allow people to keep their old health plans. That kept some healthy people in place, instead of making them jump into the new exchanges.
Federal health officials have also limited the amount of money the government can spend to help insurers cover the cost of new, sick patients.
Perhaps most important, insurers have been disappointed that young people only make up about one-quarter of the enrollees in plans through the insurance exchanges, according to public figures that were released earlier this year. That ratio might change in the weeks ahead because the administration anticipates many more people in their 20s and 30s will sign up close to the March 31 individual “qualified health plan” (QHP) enrollment deadline. Many insurers, however, don’t share that optimism.
These factors will have the unintended consequence of raising rates, sources said. “We’re exasperated,” said the senior insurance official. “All of these major delays on very significant portions of the law are going to change what it’s going to cost.”
One executive, described as being “from a populous swing state,” expects his company to triple the rates on next year’s exchange policies.
Time to freak out about a death spiral? Not yet. Here’s some reason for caution: