Health Insurance Companies Seek Big Rate Increases for 2016

[eridani]

http://www.nytimes.com/2015/07/04/us/health-insurance-companies-seek-big-rate-increases-for-2016.html

Health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected. Federal officials say they are determined to see that the requests are scaled back.

The rate requests, from some of the more popular health plans, suggest that insurance markets are still adjusting to shock waves set off by the Affordable Care Act.

It is far from certain how many of the rate increases will hold up on review, or how much they might change. But already the proposals, buttressed with reams of actuarial data, are fueling fierce debate about the effectiveness of the health law.

A study of 11 cities in different states by the Kaiser Family Foundation found that consumers would see relatively modest increases in premiums if they were willing to switch plans. But if they switch plans, consumers would have no guarantee that they can keep their doctors. And to get low premiums, they sometimes need to accept a more limited choice of doctors and hospitals.

Comment by Don McCanne of PNHP: Although it will be about three months before we have the final health insurance premiums for 2016, the information we have already can warrant a few preliminary observations.

* The Affordable Care Act appears to have failed on delivering its promise of controlling global health care costs. The primary reason given by the insurers when submitting requests for much higher premiums for 2016 is that health care costs were much higher than their actuaries anticipated.

* Some complain that new enrollees were less healthy and thus drove spending up, but under the individual mandate, increases in enrollment were across the board and not concentrated amongst the less healthy.

* There may have been some pent up demand amongst new enrollees (e.g., joint replacement) but that is only a transient surge which does not warrant long term premium increases. Much of the pent up demand will have been ventilated as most of the remaining uninsured are ineligible by immigration status or by personal hardship. The numbers who are eligible but decline coverage will only trickle in as health care needs develop.

* It appears that the increases in the benchmark silver plans will not be as great as the increases currently receiving considerable publicity. Requests over a ten percent increase were required to be made public whereas increases under ten percent will not be known until plans are marketed prior to the November 1 beginning of open enrollment.

* Because rate increases vary considerably amongst the plans, many individuals will be forced to choose between paying higher rates by staying in their current plans or changing to plans with lower rates but with different narrow provider networks thereby potentially sacrificing continuity of care.

* Respected institutions such as Geisinger in Pennsylvania and Scott and White in Texas are asking staggering premium increases, indicating that the supposed cost containment features of ACA are having a negligible impact on legitimate spending.

* Little is being said about the insurance underwriting cycle. Large, well capitalized insurers are able to price their products more competitively, decreasing the market presence of less competitive insurers. Once market dominance is established, insurers are free to drive up premiums as much as 20 to 40 percent, as reported in this New York Times article. The regulated medical loss ratios are generous enough to allow market performance (profits) to excel, as confirmed by current Wall Street activity in health insurance equities.

So are we going to wait until October when the premium rates are announced, and then do nothing other than continue to stand back and observe because the insurers will reassure us that silver benchmark plans didn’t go up that much - maybe 4.4 percent - even if it means that the enrollees have to switch plans and find new providers in a different narrow network? Is this the good that’s coming out of all of this? What about those who want to continue with their current providers, but face a 20 to 40 percent premium increase? Will the death spiral bleed over from insurers to patients?

Enough. Single payer.

[pinboy3niner]

1. Their greed will eventually put them out of business

They're helping to make the case for a single payer system with no middlemen. Way to go!

[KG]

2. well, gee, nobody could have predicted this....

[eridani]

3. ACA has helped people, but not enough. That's why we need to move on to single payer n/t

[PowerToThePeople]

4. Nationalize them. n/t

[Buns_of_Fire]

5. Some of the CEOs probably had to put off buying a new yacht last year.

But surely no one would expect them to have to go TWO years without upgrading! Be reasonable!

[Volaris]

7. Yep u hit the nail on the head, man...

EVERY Sensible Woodchuck knows that yachts are like computers; by the time you get the new one home and set up, damned things already out of date.

[pnwmom]

6. The average proposed increase in WA state is only 5.4%.

One difference is that WA's commissioner disallowed grandfathering-in the old junk policies. So more of the young and healthy have bought ACA compliant policies all along.

[eridani]

10. If you are payin $500/month, in 5 years you will be paying $649/month

Is your income going to go up that fast? Not counting the issue of avoiding care because of high deductibles and copays.

[pnwmom]

11. That is a proposed increase. The articles about it note that the state usually

approves a lower number.

But you are assuming that single-payer would keep health care costs from going up at all. We know from our experience with Medicare that that's not true. And so the ACA itself contained measures to help lower the increasing costs of Medicare.

[eridani]

12. Medicare is not allowed to negotiate drug or provider prices

That makes it not really single payer. It is asinine to suggest that a society paying TWICE per capita what other developed countries pay that we can't afford to pay for everyone.

[pnwmom]

13. Which is a HUGE problem. Yes, we do have to do something

about crazy drug prices. It's insane that we prevent Medicare from negotiating prices with the drug companies like other countries do.

[B Calm]

8. Insurance companies before ACA just raised the rates, now they are requesting to raise rates.

[Ilsa]

9. They want to raise the premiums, force

Individual subscribers out, and kill the ACA because it restrains their price gouging. Screw them. Give us single payer.