(Bloomberg) — Health insurers are asking for sharp increases in the cost of their Affordable Care Act public exchange plans next year, thanks to instability in the exchange system that’s been compounded by the Trump administration.
In Maryland, Virginia and Connecticut — the first states to make filings public — premiums for ACA exchange plans will rise more than 20% on average, according to data compiled by ACASignups.net and Bloomberg. The increases follow years of rising premiums under ex-President Barack Obama.
The increases can be blamed in part on uncertainty among insurers about the strength of the law’s requirement that people carry insurance. The Trump administration has raised doubts about whether it will enforce what is considered by some insurers to be an already insufficient penalty.
“Failure to enforce the individual mandate makes it far more likely that healthier, younger individuals will drop coverage and drive up the cost for everyone,” Chet Burrell, Chief Executive Officer of CareFirst, said in a statement. The insurer is asking for an at least 50% increase in premiums in Maryland. Burrell said uncertainty over the mandate played a “significant role” in the insurer’s rate requests.
The ACA is at a critical juncture. Republicans and Trump want to change and de-fund much of the law, and they say the rising premiums are proof it isn’t working. At the same time, many insurers point to a lack of support for ACA programs as a reason for the increases, and have asked for help.
“It would be good to have some more aggressive stabilization efforts going on,” said Joel Ario, a managing director at Manatt Health who previously worked on the ACA at the U.S. Department of Health and Human Services. “Uncertainty equals higher premiums.”
HHS Secretary Tom Price has said the administration will do what it can administratively to “support the reform effort by reviewing and initiating administrative actions to put patients, families and doctors in charge of medical decisions, bring down costs, and increase choices.” Alleigh Marre, an HHS spokeswoman, didn’t respond to a request for comment.
There are several other factors to blame for rising premiums, including underlying medical costs.
“We are seeing claims experience that reflects increased medical and prescription drug costs along with higher utilization,” Connecticut Insurance Commissioner Katharine Wade said in a statement.
That’s true in Maryland, too, said Insurance Commissioner Al Redmer. There, carriers are requesting average rate increases from 18% to 59%. That means in the Baltimore area next year, a 40-year-old could buy a basic “silver” plan for $714.95 a month from CareFirst, or one from Kaiser Permanente for $359.25 with a more limited network of doctors.
Not Just Politics
“If carriers in Maryland are losing just on medical claims you can’t point to the current political climate and say, ‘Now things are worse,’” he said.
(Photo: Diego M. Radzinschi/ALM)
The rates are preliminary, and regulators often have the power to change them. Most other states will report their rates over the next several months.
Increases in the full price do not necessarily reflect what the typical enrollee will pay for coverage out of their own pockets. More than 80% of ACA exchange plan subsidies get premium subsidies. For 2017, issuers in many states raised the full cost of coverage by 20% to 30%, but the premium subsidies held the average increase in what subsidy users pay for the cheapest available coverage out-of-pocket to under 10%. If the current exchange system and subsidy system stay in place in 2018, the subsidies could continue to shield subsidy users from the effects of premium increases.
CareFirst is a major insurer in Maryland, Virginia and Washington, D.C., and sells coverage under the Blue Cross and Blue Shield brand. The company said its premiums still fall short of covering its customers’ medical costs. It projects its accumulated ACA plan losses from the start of the program through the end of 2017 will reach $600 million.
Trump has cheered on some of Obamacare’s troubles, using them to justify his party’s efforts to repeal the law.
“Insurance companies are fleeing ObamaCare -it is dead. Our healthcare plan will lower premiums & deductibles -and be great healthcare!” Trump tweeted on May 4, the day House Republicans narrowly passed a bill to repeal much of the ACA. While the legislation faces a difficult time in the Senate, the premium increases are likely to remain a part of the debate.
It’s too early to say whether the results from the three states are indicative of broader trends. An analysis of Blue Cross and Blue Shield plans by S&P Global Ratings showed that insurers’ results were generally improving and the market stabilizing in the law’s third year.
That analysis, however, didn’t include Anthem Inc., which sells insurance under the Blue Cross and Blue Shield brand in 14 states. In Virginia, where it has 165,000 customers in the individual market, Anthem is raising rates about 38%. In Connecticut, the insurer has 35,000 customers and is raising rates 34%.
“We are forecasting that the individual market will continue to shrink, and that those individuals with greater health care needs will be the most likely to purchase and retain their coverage,” Anthem told Connecticut regulators.
In some cases, rather than raising rates insurers are dropping out. Humana Inc. is withdrawing from the individual major medical market entirely. Aetna Inc. has quit Virginia, and Iowa has experienced broad pullouts. In an interview on ABC’s This Week with George Stephanopoulos, House Speaker Paul Ryan said the withdrawals showed the law is failing.
“What we’re trying to do here,” Ryan said, “is step in front of this collapsing law and make sure that we can have a system that works, a system with choice and competition and affordable premiums.”
— Read Some HealthCare.gov Shoppers Avoid Cheapest Plans on ThinkAdvisor.