VII. Key Issues: Regulation & Reform >> C. Health Reform >> Affordable Care Act (ACA) >> ACA Impact Analysis >> ACA Impact on Costs >> Impact on Private Health Insurance Premiums (last updated 11.6.17)
- 1 Overview
- 2 Long-term Premium Increases Under ACA
- 3 Short-term Premium Increases under ACA
- 4 Policymaker Assessments of ACA’s Impact on Premiums
- HealthCare.gov provides a premium estimator for premiums on the ACA exchanges. Users can browse premiums without needing to enter income or other detailed info. They simply must specify whether they are buying for themselves/family or trying to buy small employer coverage on the SHOP exchange.
- Kaiser Family Foundation. A KFF survey conducted from April 3 through May 11, 2014, “provides new insights into the experiences of plan switchers,” people who previously had non-compliant individual-market coverage and switched to new coverage after Jan. 1 either by buying coverage through the state marketplaces or directly from insurers. This group includes people who had their old policies cancelled as the ACA’s requirements kicked in, as well as people who switched for other reasons, including the availability of premium subsidies.
- The survey finds that plan switchers are about as likely to report that they are paying less for their new plan than their old one (46%) as they are to say they are paying more (39%).
- The survey reports that “about half of plan switchers report having received a cancellation notice from their previous insurer.” Because this group is combined with those who voluntarily switched plans, there is no way to determine for certain from the survey results how such individuals fared in terms of premium payments. However, presumably, anyone who voluntarily switched coverage to take advantage of subsidies would have done so only if net premiums (after subsidies) were lower than previously, else there would have been no good reason to switch. Assuming this is true, then the 39% all represent individuals with cancelled plans, implying that if half of switchers had cancelled plans, 78% paid higher premiums (39/50) and 22% paid lower premiums.
Short-term Premium Increases under ACA
2013 to 2017
Individual Market Premium Changes: 2013 – 2017. “The average 2013 monthly premium from MLR data submitted by individual market issuers in the 39 states using Healthcare.gov in 2017 was $232. The average monthly premium for plans purchased by individual market consumers in the 39 Healthcare.gov states was $476 in 2017. For these 39 states, Table 1 illustrates the average monthly premiums purchased in the individual market in 2013 and the 2017 average monthly exchange plan premium, showing a $244 and 105% increase. The median state percent increase was 108%. The results are similar with those published by online health insurance broker eHealth, which found a 99% increase in premiums for plans purchased on their portal between 2013 and 2017… All 39 states using Healthcare.gov experienced an increase in individual market premiums from 2013 to 2017. Across the Healthcare.gov states, the lowest premium increase was 12% (New Jersey), and the highest premium increase was 222% (Alabama). Sixteen states had premium increases below the national average of 105%, 20 states experienced premium increases between 105% and 200%, and 3 states saw premiums triple with increases of 200% or more.” (Department of Health and Human Services, 5.23.17)
2015 to 2016
2015 to 2016 ACA Exchange Plans
An American Action Forum analysis cautions: “There is significant variation in cost growth from state to state. While there are some merits of measuring the growth of insurance costs through a national average, it would be foolish to judge cost increases using only this number because the states’ marketplaces are independent of each other. Of the states examined, Oklahoma, Alaska, and Montana saw the highest increases with each state seeing benchmark premium increases of over 31 percent, while Indiana, Mississippi, Maine, and Ohio all saw decreases in average premiums. The Indiana insurance market will see the most significant decreases in premiums with a 12.6 percent decrease followed by Mississippi at 8.2 percent and Maine at 1.2 percent. There can even be significant variation in premium costs between regions in a state. The country is broken up into 501 different rating areas. Within each state, each rating area can have a different price for each plan.” Figures below are reported in reverse chronological order.
- Wall Street Journal (November 2015). “Rising Rates Pose Challenge to Health Law” (11.18.15). Premiums for individual plans offered by the dominant local insurers are rising almost everywhere for 2016, typically by double-digit percentage increases, according to a Wall Street Journal analysis of plan data in 34 states where the HealthCare.gov site sells insurance. The Journal reviewed choices available in the most populous county of each state, as well as the county holding the state capital.
- In 13 of the 30 states with premium increases, people in popular plans can pay lower premiums in 2016 than they did in 2015—as long as they are willing to switch to a plan with a different insurer, usually with a narrower network of doctors and a higher deductible
- In the other 17 of those states, switching insurers could only mitigate the size of a premium increase from 2015 and may also include a boost in deductibles.
- Stockman, David. (11.6.15) Obamacare Premiums Up 20%—-3X More Than Claimed By White House. “The Obama administration claims that the premium increases in the (Obamacare) health insurance exchanges are averaging 7.5% across the country. That figure, however, turns out to be wrong. An analysis by the Daily Caller News Foundation says that the real increase is 20.3% – almost three times as high. Why the difference? The administration looked only at the prices of Silver plans, ignoring the prices for Bronze, Gold and Platinum alternatives. The Daily Caller, by contrast, looked at all four metallic levels. Furthermore, Richard Pollock explains that: The 20.3 percent figure is the average for all plans. Premium increases in some states will be much higher. In Utah, for example, some enrollees in an individual plan will face a 45 percent price jump. In Illinois, the highest price hikes for individuals in the federal exchange will be 42.4 percent. Some insurers in Tennessee will experience a 36.3 percent price rise.” (David Stockman’s Contra Corner, 11.6.15)
- Avalere Health. (10.30.15) Avalere Analysis: 2016 Exchange Premiums. “According to HHS, more than 8 in 10 (86 percent) of current enrollees can find a lower premium plan in the same metal level by returning to the exchange and shopping for 2016. As a result, tables and figures below examine the lowest cost options in two metal levels: Average lowest cost Bronze premium by state: 2015 vs. 2016 and percent change and Average lowest cost Silver premium by state: 2015 vs. 2016 and percent change. The average lowest silver plan in states with a federal exchange increased by 13.0 percent from 2015 to 2016, compared to 3.2 percent from 2014 to 2015.”
- CMS (October 2015). 2016 Marketplace Affordability Snapshot (10.26.15). Across all 37 states that used the HealthCare.gov platform, the cost of the benchmark plan will increase on average 7.5 percent in 2016. For those consumers who live in 30 of the largest markets representing more than 60 percent of total enrollment, the average increase in premiums for the benchmark plan is 6.3 percent for the second-lowest cost silver plan. These increases do not take into account advanced payments of premium tax credits, which lower the monthly costs for the overwhelming majority of Marketplace consumers.
- The second-lowest cost silver plan is notable because it serves as the benchmark plan to calculate the amount of advanced premium tax credit consumers may be eligible for to help lower the cost of their Marketplace coverage. Looking across all “metal levels” of plans available, silver plans are the most popular plans on the Marketplace. About 70 percent of consumers enrolled in silver plans, with approximately 11 percent of all consumers enrolled in the second-lowest cost (benchmark) silver plans in 2015.
- Four states will see a decline in the benchmark plan premium. In 3 states, premium increases will exceed 30%; another 5 states would experience premium increases in excess of 20%.
- Kaiser Family Foundation (October 2015). Analysis of 2016 Premium Changes in the Affordable Care Act’s Health Insurance Marketplaces (10.26.15). The analysis examines 2016 changes in premiums for the second-lowest cost (“benchmark”) silver marketplace plans in major cities in the 49 states and the District of Columbia, where we were able to find complete data on rates.
- Among these major cities, the percent change from last year in the benchmark premium ranges from -10.6% in Seattle, Washington to 38.4% in Nashville, TN. The simple average of these rate changes is 10.1% before accounting for the premium tax credit.
- For a 40 year old making $30,000 per year, the average change after tax credits would be -0.2% (holding age and income constant)
- Investors Business Daily (October 2015). The lowest-cost bronze plans available on HealthCare.gov will see their premiums jump by an average of 12.7% in 2016, an IBD analysis reveals (IBD’s analysis covers one major metro area in each of the 37 states using the federally run HealthCare.gov). On top of that, deductibles for the cheapest plans will rise by an average $420, or 7.4%, to $5,653. These data reflect the change in premiums before any government subsidy. Note that Bronze plans enrolled roughly 20% of all individual market consumers in 2015.
Individual State Estimates
- Avalere Health Analysis. (10.30.15) Reflects 2015-2016 premium changes in states using the federal exchange.
- The 3 Real Reasons Why Obamacare Premiums Are Rising Significantly in 2016. “Based on data from the Washington Examiner, 231 insurers requested double-digit percentage premium price hikes for 2016, as opposed to just 121 in 2015. Furthermore, the magnitude of the hikes will be much greater in the upcoming year. A whopping 126 plans aimed for a minimum 20% premium hike, 61 plans attempted to justify a 30% premium boost, 26 policies are targeting a 40% price jump, and a dozen plans actually requested a 50%-plus premium jump for 2016…[W]hen we look past the politics and at the dynamics behind Obamacare, it becomes crystal-clear that three events are leading to the price hikes we’ll see in 2016.
- Medical loss ratios are simply too high.
- Not enough young adults are enrolling.
- The Congressional Budget Office estimates were way off from the start. (Motley Fool, 10.31.15)
2015 to 2016 Employer Health Benefits Costs
- Willis Towers Watson/National Business Group on Health. According to the 2015 Willis Towers Watson/National Business Group on Health (NBGH) Best Practices in Health Care Employer Survey (reported 3.9.16), “total health care costs (employer and employee) reached $12,041 per employee per year (PEPY) in 2015 and are expected to rise nearly 5% to $12,643 PEPY in 2016.”
- Bureau of Labor Statistics (expected April 2016). Employment Cost Index. This provides quarterly estimates of employer costs of health benefits per hour worked, including breakdowns by type of employer, employer size, union status and other categories. Data from October 2015 show the 12-month increase in private employers’ costs of health benefits per hour worked was 3.0%, compared to 2.6% one year earlier. Data for the first quarter of 2016 will not be available until April 2016.
- KFF/HRET 2016 Employer Health Benefits Survey (expected September 2016). This survey showed that total premiums for single (family) coverage rose 3.8% (4.2%) between 2014 and 2015; this compares to 2.4% (3.0%) from 2013 to 2014 (computed from Exhibit 1.11); data showing increase from 2015-2016 will not be available until September 2016.
- Mercer’s National Survey of Employer-Sponsored Health Plans. Health benefits cost per employee grew , 6.1% from 2010-2011, 4.1% from 2011-2012, 2.1% from 2012-2013, 3.9% from 2013-2014, 4.0% from 2014-2015 and 4.2% from 2015-2016 (Fig. 1). This represents a compounded annual rate of change of 4.1% for the period 2010-2016. This compares to a compounded annual rate of 6.2% from 2007-2010 (6.3%=2007-08, 5.5%=2008-09, 6.9%=2009-10). Over 2,500 employers participated in 2014, reportedly far more than in any other health benefits survey.
- 2015 United Benefit Advisors (UBA) Health Plan Survey. (October, 2015) Premium renewal rates (the comparison of similar plan rates year over year) increased an average of 6.2% for all plans—up from last year’s 5.6% increase. Last year, employers overwhelmingly utilized early renewal strategies to delay moving to higher-cost Affordable Care Act (ACA)-compliant plans and keep increases in check. However, these delay tactics ran out this year and, as a result, many of these same small groups moved to the higher-cost, community-rated ACA plans. As small groups lack negotiating power, they largely drove premiums up from last year.
2017 Exchange Plans
- Get Ready for Huge Obamacare Premium Hikes in 2017. “Marilyn Tavenner, the president and CEO of America’s Health Insurance Plans (AHIP) and former HHS Director, ‘said in an interview with Morning Consult that the culmination of market shifts and rising health care costs will force stark increases in health insurance rates in the coming year. ‘I’ve been asked, what are the premiums going to look like?’ she said. ‘I don’t know because it also varies by state, market, even within markets. But I think the overall trend is going to be higher than we saw previous years. That’s my big prediction.’ If Tavenner is right, Obamacare will jump dramatically—last year’s premium for the popular silver-level plan surged 11 percent on average. Although Tavenner didn’t mention deductibles, in 2016, some states saw jumps of 76 percent, while the average deductible for a 27-year-old male on a silver plan was 8 percent.” (Fiscal Times, 4.21.16)
- Why Do Health Costs Keep Rising? These People Know. “The Geisinger Health Plan, run by one of the nation’s top-rated health care organizations, foresees medical costs increasing next year by 7.5 percent for people buying insurance under the Affordable Care Act. So when Geisinger requested a rate increase of 40 percent for 2017, consumer advocates were amazed… Geisinger has been a pioneer in the use of electronic health records and genomic medicine, recruiting 100,000 patients for DNA sequencing studies in the last two years. It has embraced ‘pay for performance,’ offering a warranty for major surgical procedures and promising not to charge extra if complications occur. But innovation has been no match for the actuarial surprises dealt out by the Affordable Care Act. Mr. Wrobel said Geisinger had simply underestimated how much care its new customers would need. ‘Our rates for Medicare, Medicaid and employer-sponsored insurance have been relatively stable, but those products have to bear the cost of our losses on exchange business,’ Mr. Wrobel said. Last October the Pennsylvania Insurance Department, headed by a former Obama administration official, approved a 20 percent increase in Geisinger’s rates, about half of what the company had requested. ‘But based on experience,’ Mr. Wrobel said, ‘the 2016 premium rate is too low, so we want to correct it in 2017.’” (New York Times, 6.9.16)
- Report: New Evidence of Rising ‘Obamacare’ Premiums. “Premiums for popular low-cost medical plans under the federal health care law are expected to go up an average of 11 percent next year, said a study that reinforced reports of sharp increases around the country in election season. The Kaiser study looked at 14 metro areas for which complete data on insurer premium requests is already available. It found that premiums for a level of insurance called the ‘lowest-cost silver plan’ will go up in 12 of the areas, while decreasing in two. The changes range from a decrease of 14 percent in Providence, Rhode Island, to an increase of 26 percent in Portland, Oregon. Half of the cities will see increases of 10 percent or more. Last year, only two of the cities had double-digit increases. ‘Premiums are going up faster in 2017 than they have in past years,’ said Cynthia Cox, lead author of the analysis.” (Associated Press, 6.15.16)
- Obamacare Premiums Are Going Up. Again. Now What? “Insurers’ rate-increase requests for 2017 are quite large… The usual caveat applies to these preliminary requests: Regulators might not approve them. But that caveat was hauled out last year by the law’s supporters, who seemed to think that this was simply the opening stage of a negotiation in which insurers asked for the stars in the hope of settling on the moon. In fact, regulators approved large rate hikes, and the state of Oregon actually made some insurers raise rates by more than they’d planned. Regulators dislike high insurance premiums, of course, but they also dislike insurance companies suddenly going out of business and leaving their customers without insurance. They are not going to approve rates that they believe will cause insurers to lose large sums of money. And thus far, everything we’ve heard from insurers indicates that they have lost large sums of money. Last year, it was possible to believe that this was simply a one-time problem… That has proven to be a false hope. If anything, losses have widened, and rates need an even bigger correction this year.” McArdle, Megan. (Bloomberg View, 6.21.16)
- Analysis of 2017 Premium Changes and Insurer Participation in the Affordable Care Act’s Health Insurance Marketplaces. “While we cannot generalize to all states until more data become available later this year, in most of these population centers, the costs for the lowest and second-lowest silver plans are, in fact, increasing faster in 2017 than they have in previous years. Based on insurer rate requests, the cost of the second-lowest silver plan in these cities will increase by a weighted average of 9% in 2017. Last year, premiums for the second-lowest silver plans in these areas increased 2% following review by state insurance departments. There is substantial variation across markets, with premium changes for second-lowest silver plans ranging from a drop of 13% to an increase of 25%. Premiums for 2017 are still preliminary and could be raised or lowered through these states’ rate review processes. We also find that some states will have fewer insurers participating in 2017 than participated in 2016.” (Kaiser Family Foundation, 7.28.16)
- Health Insurers Trying To Survive The Obamacare Wasteland. “Larry Levitt of the Kaiser Family Foundation has been quoted as saying, ‘Something has to give. Either insurers will drop out or insurers will raise premiums.’ And that’s exactly what we’re seeing. Nationwide, there was a 12 percent decline in plans in 2016 as compared to 2015, and that includes a 40 percent decline in PPO plans. There will be even more exits in 2017. Prior to Obamacare there were 18 insurers offering individual coverage in Kansas. Today there are three. The Obama administration initially praised health insurance competition in Maricopa County, Arizona. This year there were eight plans available on the Obamacare exchange; next year there will only be four—unless Aetna drops out, too. And insurers that choose to remain are increasing premiums. Texas Blue Cross has requested an increase of up to 60 percent for its 2017 premiums, and Arizona Blue Cross requested a 65 percent increase.” Matthews, Merrill. (Forbes, 8.8.16)
- Obamacare Sicker Shock. “The natural result is another round of rate shock for 2017. Insurers in 49 states have submitted their premium requests to regulators, and the average ‘enrollment-weighted’ rate increase, which accounts for market share, is in the range of 18% to 23%. The Congressional Budget Office projected 8%… Consider New York, which last Friday became the second state to finalize rates for 2017. The 19.3% rate increase the insurers requested on average for the individual market came down to 16.6% after regulatory fly-specking. The New York political class is hailing this as a great victory, but overall health-care costs aren’t rising by near 16%, and middle-class incomes aren’t either. Then there are such approved Empire State rates as high as 29.2% (Metro Plus and North Shore), 29% (UnitedHealthcare of New York) and even 89% (Crystal Run). And New York is one of the bright spots. So is California, where 11 of the 12 health plans that sell coverage under the state’s ObamaCare’s rules turned a profit the last two years. Yet the state is now reporting a final average rate increase of 13.2%, up from 4.2% in 2015 and 4% in 2016.” (Wall Street Journal, 8.12.16)
- This Insurer Used to Make Money on Obamacare Plans. Now It’s Losing Money. “‘We’re going to be very mindful of what price increases are awarded to us,’ Swedish said of rate increases ultimately decided by state regulators, according to The Wall Street Journal… To make up for its losses, Anthem has proposed significant increases to premium prices in some of the states where it’s selling on Obamacare’s exchanges. In Connecticut and Colorado, the company asked state regulators for an average rate increase of 26.8 percent. Anthem’s rates rose by more than 16 percent in California, and in Kentucky, customers purchasing insurance from the company in the individual market will see their premiums rise 22.9 percent.” (Daily Signal, 8.2.16)
- The Unstable Economics in Obama’s Health Law. “The problem isn’t technical or temporary; it’s intrinsic to how the law was written. By incentivizing insurers to misprice risk, the law has created an unstable dynamic. Total enrollment this year will be barely half the 22 million the Congressional Budget Office projected just three years ago. Premiums, meanwhile, are set to skyrocket, which will further hamper enrollment. It isn’t clear how this can be fixed.” Ip, Greg. (Wall Street Journal, 8.17.16)
- Skyrocketing Obamacare Premiums Still Lower Than Employer-sponsored Insurance. “Urban Institute researchers found that, in more than three-quarters of states and 80 percent of the large metropolitan areas they studied, total premiums were lower in an average marketplace plan than in employer-provided plans… However, most people who receive health insurance through their employers directly pay only a portion of the premium each month. The rest is paid by the employer, as part of workers’ compensation.” (Washington Post, 9.19.16)
- ObamaCare Subsidies To Explode As Cheapest Bronze-Plan Costs Surge 28%. “Overall, the cheapest bronze-plan premium will spike by an average 28.2% before subsidies, based on a review of prices in the biggest market in each of the 38 states utilizing the federal government website. That follows a 12.7% rise in 2016. For a 30-year old, a bronze premium will rise to $272 per month from $212 this year. Six markets will see increases of more than 50%, including Nashville, Tenn. (54%); Columbia, S.C. (54%); Charlotte, N.C. (55%); Chicago (65%); Oklahoma City (80%) and Phoenix (177%). The huge premium hikes will be a shock for middle-class households that earn too much to qualify for ObamaCare subsidies restricted to those earning up to 400% of the poverty level ($47,520 for a single person). But for those who get subsidies, the premium hikes look like much ado about exactly nothing… Subsidies are set to explode by 99%, to an average $121 per month vs. $61 this year. Once the bigger subsidies are factored in, the average cost of a bronze plan will be $152 per month — exactly the same as in 2016.” (Investor’s Business Daily, 10.24.16)
- Obama Health Plan Hit by Double-digit Premium Hikes. “Before taxpayer-provided subsidies, premiums for a midlevel benchmark plan will increase an average of 25 percent across the 39 states served by the federally run online market, according to a report from the Department of Health and Human Services. Some states will see much bigger jumps, others less. Moreover, about 1 in 5 consumers will have plans only from a single insurer to pick from, after major national carriers such as UnitedHealth Group, Humana and Aetna scaled back their roles. ‘Consumers will be faced this year with not only big premium increases but also with a declining number of insurers participating, and that will lead to a tumultuous open enrollment period,’ said Larry Levitt, who tracks the health care law for the nonpartisan Kaiser Family Foundation.” (Associated Press, 10.25.16)
- Here’s What the Average American Will Pay for Obamacare, by Age, in 2017. “A recent analysis from HealthPocket broke down what an American earning $48,000 annually (just a hair too much to receive the APTC) is expected to pay each month if that person purchases an average silver plan in 2017. Here’s how things shook out:
- Average silver plan premium for 30-year old: $364.91
- Average silver plan premium for 40-year-old: $410.73
- Average silver plan premium for 50-year old: $574.10
- Average silver plan premium for 60-year-old: $872.01
Assuming our fictitious individual is making $48,000 annually, the 30-year-old and 40-year-old are spending about 9% and 10% of their annual respective income on healthcare premiums. However, the 50- and 60-year-old are shelling out 14% and 22% of their respective income just for their premiums. This doesn’t even factor in what they could owe if they have to visit their doctor (i.e., copays, deductibles, and coinsurance).” (The Motley Fool, 11.7.16)
- New York Times, (7.17.16)
- In Texas, Blue Cross and Blue Shield is requesting rate increases of nearly 60 percent.
- In Oklahoma, Blue Cross and Blue Shield has proposed increases that average 49 percent.
- In Missouri, Humana has filed for a 34 percent increase.
- Humana is seeking a 39 percent increase in Michigan.
- The Oregon insurance commissioner recently approved a 24 percent increase for Providence Health Plan, which has the largest enrollment of any carrier in the state’s individual insurance market.
- The largest insurer in Tennessee, Blue Cross and Blue Shield, has requested rate increases averaging 63 percent.
- Blue Cross and Blue Shield of North Carolina, which raised individual rates by an average of 32.5 percent this year, has requested a further increase of 18.8 percent for 2017.
- In Wyoming, the proposed rate increases are relatively modest, less than 10 percent. But Wyoming already has some of the highest rates in the country, with premiums for a benchmark plan second only to those in Alaska, among states using HealthCare.gov.
Laszewski, Robert. (8.18.16) “The current risk pool deterioration in Tennessee is so bad that the insurance commissioner there just announced that health plans would be able to refile the rate increases they first requested in June. Cigna and Humana originally asked for 23% and 29% increases respectively but both companies have told the state they now see even these big increases won’t cover their accelerating claims rates. Cigna is now asking for a 46% increase and Humana is asking for a 44.3% average increase only weeks after its original filing. Texas Blue Cross has filed for a 58% increase for its 603,000 Obamacare policyholders after its parent company reported $1.2 billion in Obamacare losses during the past two years. In Pennsylvania, High Mark Blue Cross is asking for an average 41% increase. In Connecticut, Anthem Blue Cross is asking for an average increase of 27% and two of four health plans offering coverage in Connecticut will pull out for 2017. In New York, the state approved an average increase of 16.6%–more than twice what it was last year. In California, a state Obamacare advocates had pointed to as an example of how well an insurance exchange could be run, one of the exchange’s two biggest health plans, Blue Shield, recently announced that it was increasing its rates by almost 20%. This week the company announced that it would be laying off almost all of its 6,000 workers for the week of September 6th to the 9th citing Obamacare exchange losses and other commercial and individual line underwriting losses.”
Premiums by State
- Alabama: Last Obamacare Provider in Alabama Announces 39% Average Rate Hike for 2017. “Blue Cross Blue Shield of Alabama is the last remaining company offering individual plans on the Obamacare exchange in the state. Last year BCBS of Alabama raised rates an average of 28 percent. According to a recent story at AL.com, the state will review the rate request proposed by BCBS this year but does not have the ability to reject the proposed rate increases… The exiting of other insurers from the exchange in Alabama is a clear indication of the difficulty in providing ACA health plans at the most affordable price without incurring significant financial losses. Because Blue Cross has been providing Alabamians access to healthcare coverage for 80 years, we are planning to stay in this market for another year.” (HotAir, 8.8.16)
- Arizona: Arizona Obamacare Plan To Jump By 116 Percent When Premiums Go Up Next Year. “The Department of Health and Human Services revealed Monday that premiums for a midlevel benchmark plan will increase an average of 25 percent across the 39 states served by the federally run online market, and that about 1 in 5 consumers will have plans only from a single insurer to pick from, after major national carriers such as UnitedHealth Group, Humana and Aetna scaled back their roles. However, in Arizona, unsubsidized premiums for a hypothetical 27-year-old buying a benchmark “second-lowest cost silver plan” will jump by 116 percent, from $196 to $422, according to the administration report.” (CBS New York, 10.25.16)
- California: Covered California Ups Health Insurance Prices by Double Digits. “Covered California, the biggest state public health exchange, is implementing some hefty price increases for California residents who use the e-commerce platform to enroll or re-enroll for healthcare insurance. For the next enrollment season that begins Nov. 1 and runs until Jan. 31, 2017, the average cost of buying a health insurance policy will increase by about 13.2% compared with about 4% in each of the last two years, according to the exchange.… Covered California says consumers will need to research plans carefully before buying, since healthcare rate increases will vary widely by geography. Increases range from as much as 28.6% in Los Angeles county to as low as 8.4% in San Joaquin, Stanislaus, Merced, Mariposa and Tulare counties.” (Internet Health Management, 8.11.16)
- Illinois Obamacare Rate Shock. “Monday, Illinois citizens were jolted by a piercing pain in the wallet as federal officials unveiled proposed Obamacare insurance premium rates for 2017. Insurers plan to dial up rates as much as a heart-stopping 45 percent for those who buy plans on the Obamacare marketplace when open enrollment starts Nov. 1. That means thousands of people will scramble for affordable insurance … and won’t find it. Is this rate shock unforeseen? Not really. Rocketing Obamacare rate requests have become an annual rite of summer, as welcome as sunstroke. In California, for instance, Obamacare health coverage is slated to rise by an average of 13.2 percent next year — more than three times the increase in each of the past two years. In Michigan, the pass-the-smelling-salts proposal is 17.3 percent… Customers struggle to pay premiums and out-of-pocket expenses. Many will pay more for less. Insurers struggle to eke out a profit or control losses. You don’t need an X-ray machine to reveal the truth: The law is unraveling.” (Chicago Tribune, 8.2.16)
- Illinois Department of Insurance: Premiums for Plans on Obamacare Exchange Set to Skyrocket. “According to new data released Aug. 24 by the Illinois Department of Insurance, premiums for the cheapest silver-level plan on the ObamaCare exchange are set to rise by an average of 45 percent next year. The cheapest bronze-level plans will rise by an average of 44 percent, and the cheapest gold-level plans will rise by 55 percent. In some regions of the state, premium increases will soar far higher. In the Metro East area, for example, premiums for the cheapest silver-level plan will increase by a whopping 84 percent. Some individuals with more expensive plans could see even higher premiums. In fact, Blue Cross Blue Shield requested permission to more than double premiums on some individuals.” (Illinois Institute, 8.25.16)
- Indiana: Wellmark Plans 38% to 43% Increases for Some Customers. “Tens of thousands of Iowans who buy their own health insurance are about to receive a shock in the mail. Wellmark Blue Cross & Blue Shield is sending letters this week telling about 30,000 customers it plans to raise their premiums by 38 percent to 43 percent next year. Wellmark sells about three-quarters of individual policies in Iowa’s health-insurance market. The steep increases will affect people who bought relatively new plans that comply with rules of the Affordable Care Act… Wellmark Executive Vice President Laura Jackson said poor health and rising medical costs forced the company to seek state permission to raise premiums so aggressively on the plans in question. She said the company spent $1.27 on health care last year for every dollar in premiums it took in for those customers. The company says it lost $99 million on those customers in the past two years… Medica, a much smaller health insurance carrier, is seeking an increase of nearly 20 percent on individual policies in Iowa.” (Des Moines Register, 5.12.16)
- Minnesota health insurers propose big premium hikes for individual plans. “Minnesota health insurers are seeking big premium increases next year for people who buy coverage on their own, with proposed jumps for thousands of people averaging anywhere from 36 percent to 67 percent. About 270,000 people buy coverage through Minnesota’s individual market, where shoppers buy through insurers, brokers or the state’s MNsure health insurance exchange. Insurers defend the proposed spikes as necessary given escalating medical costs among enrollees. One health plan, in fact, said the only alternative would be to drop out of the market entirely… ‘These are big increases,” said Cynthia Cox, a researcher at the Kaiser Family Foundation who tracks rates nationally. ‘There are other states where we’re seeing similarly large increases, but this is on the high end.’” (Star Tribune, 9.2.16)
- Near ‘Collapse,’ Minnesota to Raise Obamacare Rates by Half. “The increases range from 50 percent to 67 percent, Commissioner Mike Rothman’s office said in a statement. Rothman, who regulates the state’s insurers, is an appointee under Governor Mark Dayton, a Democrat. The rate hike follows increases for this year of 14 percent to 49 percent. ‘It’s in an emergency situation — we worked hard and avoided a collapse.’ Rothman said in a telephone interview. ‘It’s a stopgap for 2017.’ Most of the insurers in Minnesota’s individual market also plan to limit enrollment, to avoid taking on too many customers from Blue Cross and Blue Shield of Minnesota, which is leaving the exchanges after financial losses, the state said. Taking on too many new customers could harm insurers’ finances or overwhelm the doctors and hospitals that they contract with.” (Bloomberg Markets, 9.30.16)
- New Mexico: “With Presbyterian’s exit and BCBSNM’s return, four carriers are expected to offer plans in the New Mexico exchange in 2017. Their approved average rate increases for 2017 are as follows: Blue Cross Blue Shield of New Mexico: 83.1 percent; New Mexico Health Connections: 33.07 percent; Molina: 24 percent; Christus: 15.7 percent. There are no PPO options in the New Mexico exchange in 2016, and that will continue to be the case in 2017.” (HealthInsurance.org, 9.26.16)
- New York. “Consider New York, which last Friday became the second state to finalize rates for 2017. The 19.3% rate increase the insurers requested on average for the individual market came down to 16.6% after regulatory fly-specking. The New York political class is hailing this as a great victory, but overall health-care costs aren’t rising by near 16%, and middle-class incomes aren’t either. Then there are such approved Empire State rates as high as 29.2% (Metro Plus and North Shore), 29% (UnitedHealthcare of New York) and even 89% (Crystal Run). And New York is one of the bright spots.” (Wall Street Journal, 8.12.16)
- North Carolina.
- In North Carolina, ACA Insurer Defections Leave Little Choice for Many Consumers. “More than 250,000 people in North Carolina are losing the health plans they bought under the Affordable Care Act because two of the three insurers are dropping out — a stark example of the disruption roiling marketplaces in many parts of the country. The defections mean that almost all of the state, from the Blue Ridge to the Outer Banks, will have just one insurer selling ACA policies when the exchanges open again for business in November. The remaining company, Blue Cross Blue Shield of North Carolina, agonized over whether to leave, too. Instead, it is raising its rates by nearly 25 percent. In no other state will as many people find such limited choice.” (Washington Post, 10.14.16)
- NC Blue Cross Announces Rate Increase of 24.3 Percent for ACA Marketplace Plans. “Blue Cross and Blue Shield of North Carolina has announced it will increase premiums for Affordable Care Act plans on the individual market by an average 24.3 percent for 2017. Some consumers will pay more and some will pay less. That is higher than the company’s original rate request filed in May for an 18.8 percent increase. The rate was approved by the state Department of Insurance, and Blue Cross announced it in a blog post. Blue Cross received an average 32.5 percent rate increase for 2016 – one of the highest in the country. Critics of the ACA have contended the health reform law has been failing partly because premium increases for the individual market plans have been rising beyond expectations.” (News Observer, 10.17.16)
- Oklahoma: “Blue Cross Blue Shield of Oklahoma will be the only carrier offering plans in the exchange in 2017, but they already have 95 percent of the exchange market share. BCBSOK revised their individual market rate filing in August 2016, proposing an average rate increase of 76 percent for 2017; state regulators confirmed in October that the 76 percent average rate increase would take effect in January 2017. Oklahoma’s average rate increase for the individual market is by far the highest in the country for 2017.” (HealthInsurance.org, 10.7.16)
- Tennessee Insurance Commissioner: Obamacare Exchange ‘Very Near Collapse.’ “Her remarks largely overshadowing the dramatic premium increases, Commissioner Julie Mix McPeak thrust the issue of preserving competition into the spotlight at a moment when states around the country are grappling with dwindling numbers of insurers willing to sell on the exchange… ‘I felt like I didn’t have any choice but to allow them to refile their rates,’ McPeak said. Cigna asked for and received an average 46.3 percent increase. Humana asked for and received an average 44.3 percent increase. BlueCross BlueShield of Tennessee, which did not refile its request, asked for and received a 62 percent increase. The insurers will now apply with U.S. Health and Human Services for approval as federally qualified health plans, which is expected toward the end of September.” (The Tennessean, 8.25.16)
- Tennessee Insurance Commissioner: Obamacare ‘Very Near Collapse.’ “As Obamacare continues to face numerous setbacks, Tennessee’s insurance commissioner declared on Tuesday that its exchange was ‘very near collapse’ after she approved several large premium hikes to keep it in business… The increases—which include numbers as high as 62 percent for Blue Cross Blue Shield—come at a troubled time for local insurers. BCBS, Tennessee’s only statewide insurer, estimates that it will lose almost $500 million over a 3-year period by the end of 2016. Furthermore, Cigna and Humana may either shrink or pull out entirely depending on the market next year. McPeak’s move is thus meant to ensure every firm’s coverage area and solvency before open enrollment begins in November.” (Weekly Standard, 8.26.16)
- Tennessee Official Not Chicken Little on Obamacare ‘Near Collapse.’ “On Tuesday, Commissioner Julie Mix McPeak, who runs Tennessee’s Department of Commerce and Insurance, announced that her department was approving massive premium increases for insurers providing individual health insurance policies through the Patient Protection and Affordable Care Act exchange in the state… In Tennessee, 57 of the 95 counties have only one insurer offering individual policies through the exchange, McPeak said. When McPeak took her concerns about the shrinking interest in providing coverage to state residents to the federal Department of Health and Human Services she said her concerns were brushed aside… ‘We agree with the assessment of the ACA marketplace in Tennessee,’ Vaughn said. ‘We appreciate the support of our request to close the gap between our rates and medical expenses for ACA marketplace plans. Beyond rates as we’ve discussed with the (TDCI), we continue to have concerns about uncertainty with the ACA at the federal level.’” (Tennessean, 8.27.16)
Projections for 2018
- Understanding Recent Developments in the Individual Health Insurance Market: Obama White House Council of Economic Advisors, January 2017. “The brief reaches three main conclusions:
- Continued growth in Marketplace sign-ups for 2017 and a range of other evidence show that premium increases are not having substantial adverse effects on either individual market enrollment or the risk pool—rebutting claims that the individual market faces a ‘death spiral.’
- The 2017 premium increases reflect an ordinary process of adjustment to a new market.
- Insurers’ premium and plan design changes, together with recent policy changes, appear roughly sufficient to return premiums to a sustainable level, implying that this year’s increases were a one-time correction. This correction will set the stage for more stable pricing and stronger competition, absent disruptive policy changes or developments that create substantial uncertainty…
There is significant potential for the level of competition in the individual market to increase in the years to come. With premiums returning to a sustainable level, incumbent insurers are likely to become less likely to exit markets and more likely to expand their participation into additional areas. Sustainable pricing will also create attractive opportunities for insurers to re-enter markets they may have left and for new insurers to enter markets for the first time.”
- Insurers Offer Early Sign of ACA Exchange Plans for 2018. “Anthem Inc. ANTM 0.77% made preliminary filings indicating it will offer plans on the Affordable Care Act marketplaces in Virginia and Kentucky next year, providing an early signal on the insurer’s exchange business. Cigna Corp. CI 2.26% and Aetna Inc., AET 2.07% which like Anthem have said they are reconsidering their exchange offerings, are among the insurers that made similar filings in Virginia. But one current Virginia ACA insurer, UnitedHealth Group Inc., UNH 1.35% didn’t file 2018 forms, and a spokesman confirmed it would leave the state’s marketplace next year. The filings represent early moves toward offering plans on those states’ exchanges, but the insurers could reverse course in coming weeks or months, and their strategy may be different in other states. The early disclosures also don’t include details such as rates and the regions where they intend to participate.” (Wall Street Journal, 4.20.17)
- Obamacare Premiums Rise as Insurers Fret Over Law’s Shaky Future. “In Maryland, Virginia and Connecticut — the first states to make filings public — premiums for Affordable Care Act plans will rise more than 20 percent on average, according to data compiled by ACASignups.net and Bloomberg… ‘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 percent to 59 percent… In Virginia, where it has 165,000 customers in the individual market, Anthem is raising rates about 38 percent. In Connecticut, the insurer has 35,000 customers and is raising rates 34 percent.” (Bloomberg Politics, 5.9.17)
- Virginia Insurers Are Requesting Premium Rate Increases as High as 20% in 2018. “According to the state’s Bureau of Insurance, rate increases range from a low of 1.7 percent to a high of 20.4 percent, and some insurers will have premiums increase three-fold… There will also be fewer insurers operating on the Obamacare exchanges in 2018 since Aetna and UnitedHealthcare have dropped coverage. ‘Four fewer insurers are offering plans on the individual exchange compared to last year,’ the article said. ‘No new issuers have filed intentions to offer plans on Virginia’s exchange either. Last year, Aetna and Cigna both decided to participate in Virginia’s ACA market for the first time.’” (Washington Free Beacon, 5.12.17)
- Insurers Request Double-Digit Premium Rate Increases for Obamacare Plans Next Year. “In Oregon, there were eight health insurers participating in the individual market that requested premium rate hikes ranging from 6.9 percent to 21.8 percent… Rates increased an average of 23 percent in 2016 and 27 percent in 2017.
- BlueCross BlueShield requested a premium rate hike of 12.7 percent in Vermont, and MVP Health Plan Inc. requested an increase of 6.7 percent.
- Finally, in Washington, D.C., CareFirst BlueCross Blue Shield and Kaiser Permanente, two insurers participating on the individual market, have requested rate hikes ranging from 13 to 39.6 percent. (Washington Free Beacon, 5.22.17)
- Millions Who Buy Health Insurance Brace for Double-digit Increases. “The most exposed consumers tend to be middle-class people who don’t qualify for the law’s income-based subsidies. They include early retirees, skilled tradespeople, musicians, self-employed professionals, business owners, and people such as Sharon Thornton, whose small employer doesn’t provide health insurance. ‘We’re caught in the middle-class loophole of no help,’ said Thornton, a hairdresser from Newark, Delaware. She said she’s currently paying about $740 a month in premiums, and expects her monthly bill next year to be around $1,000, a 35 percent increase… About 17.6 million people buy individual health insurance policies, and half of them get no subsidies under the law, according to estimates by the nonpartisan Kaiser Family Foundation. The number of unsubsidized customers with ACA plans outside the health insurance marketplaces dropped by 20 percent this year, after the big premium increases. ‘The unsubsidized part of the market outside the exchanges has shrunk noticeably as premiums have increased,’ said Kaiser’s Larry Levitt. ‘It’s likely that the people dropping out of the market are healthier overall. So the pool has potentially deteriorated.’” (CBS News, 9.4.17)
- As Insurance Rate Deadline Looms, Some States See Sharp Premium Increases. “Proposed average rates filed by insurance companies vary widely from state to state, but reported figures reveal increases of 30 to 40 percent for some. The deadline for insurance companies to send final contracts to regulators is Sept. 27. For example, Idaho, Wyoming, Louisiana, Iowa, Missouri and Utah are all requesting premium increases above 40 percent. While most of those increases will be absorbed by federal subsidies, one lawmaker said he believes individuals will be paying much more of the cost of their premiums. Rep. Ralph Abraham (R-LA), said Louisiana is looking at increases of over 40 percent, but he added that this is replicated across the nation. ‘If we do not do something as a Congress to address the ACA, this will continue,’ Abraham told Patient Daily. Abraham disputed claims that most of those buying health insurance in exchanges will not see premium costs rise because they will be covered by federal subsidies, including those under cost sharing reduction (CSR)… In Iowa, the debate over exchange coverage is pressing, particularly as there is only one company offering individual plans in the state. That has prompted the state to request a change of rules to introduce a stop-gap measure that would essentially allow individuals off-exchange to buy directly from insurance companies but maintain the benefits, and subsidies, of the exchanges. It is designed to head off the potential that thousands will simply drop their insurance rather than pay much higher premium prices. The Centers for Medicare and Medicaid (CMS) has yet to rule on the request.” (Patient Daily, 9.13.17)
- Affordable Care Act Health Insurance Will Be Unaffordable in 2018 for Many Middle-Income American Families. “According to a study released today by eHealth, Inc.(NASDAQ:EHTH), which operates eHealth.com, the average family of three earning slightly too much to qualify for subsidies in 2018 would need to increase its household income by nearly $29,000 before health insurance became ‘affordable’ based on Obamacare criteria. The Affordable Care Act (ACA or Obamacare) considers health insurance to be ‘unaffordable’ when annual premiums for the lowest-priced plan in a market cost more than 8.16% of a household’s modified adjusted gross income (or MAGI). When health insurance is unaffordable by this standard, individuals and families may qualify for an exemption from Obamacare’s individual mandate to buy health insurance.” (eHealth, 9.26.17)
- Health Insurers in Florida Request Premium Rate Hikes as High as 71%. “Molina Healthcare requested the highest rate increase of 71.2 percent. Individuals with this coverage can expect their monthly premium to increase from $402 to $688. Blue Cross and Blue Shield requested a 38.1 percent increase, Celtic Insurance Company requested a 46.1 percent increase, Florida Health Care Plan requested a 26.5 percent increase, Health First Commercial Plans requested a 39.3 percent increase, and Health Options requested a 36 percent increase.” (Washington Free Beacon, 10.8.17)
Policymaker Assessments of ACA’s Impact on Premiums
- President Obama said on 10.20.16 that the Affordable Care Act is working, but he acknowledged that “growing pains” are causing some Americans to be hurt by escalating insurance prices in marketplaces created under the law. The president said rising premiums and diminished competition in ACA insurance exchanges in some states are especially problematic for people who do not qualify for federal subsidies that the law provides.
- Former President Bill Clinton said on 10.3.16, “the people who are out there busting it … wind up with their premiums doubled and their coverage cut in half. It’s the craziest thing in the world.”
- Minnesota’s Democratic Governor Mark Dayton said on 10.12.16 that the ACA has “some serious blemishes and serious deficiencies” and is “no longer affordable to increasing numbers of people.”