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Insurers Seek Increases for Obamacare Premiums in Early Fillings

Tuesday, June 6, 2017  
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Insurance companies in about half a dozen states have filed for premium increases ranging from 6 percent to 58 percent for 2018, citing rising medical costs and taxes as well as uncertainty surrounding the new Trump administration's implementation of the health care law. 

The increases would only affect plans sold on the marketplaces established by the 2010 law. They are still preliminary. Federal and state insurance review rate requests throughout the summer and fall and often negotiate different increases — sometimes lower, sometimes higher.

Federal subsidies also blunt the impact on consumers of high rate increases.

It's still early in rate filing season. Another set of states, including South Dakota, Arizona, Texas and Wyoming, will report rates later Thursday, and dozens more set their deadlines in June. The federal filing deadline is June 21. Not every state makes the information public early in the process.

In the seven states with public premium information available, the average requested increase is 27.5 percent, according to an analysis from Democratic blogger Charles Gaba, who has tracked the filings for the last several years. Gaba's average is weighted according to how many people signed up for each insurer's plan in 2017.

In most of those seven states, the increases are higher than those requested for 2017. So far, no plan is seeking a lower rate, which has happened in the past.

The jumps reflect, in part, traditional increases in medical costs, as well as an expected boost from the so-called health insurance tax, which Congress had delayed but which is set to take effect in 2018 unless lawmakers repeal it as they would in the House health care bill (HR 1628).

Plans also attribute the jump to uncertainty driven by the change in federal leadership. Republicans now fully control the implementation of a health care law they have openly worked to undermine, and insurers say their actions are driving up prices.

The biggest question for insurers is the so-called cost-sharing reductions, a subsidy program under the 2010 law aimed at helping low-income people afford copays and deductibles. Because of a court case, the Trump administration could stop paying the subsidies as early as this month, which insurers warn would have a catastrophic effect on the market.

"If health plans lack certainty about continued CSR funding, the only operational alternative is to incorporate CSR costs into premiums, which translates into an estimated 15-20 percent premium increase for all consumers in the individual market and higher costs to taxpayers," the lobbying group America's Health Insurance Plans wrote in a letter to Senate Finance Committee Chairman Orrin G. Hatch, R-Utah, earlier this week.

Blue Cross Blue Shield of North Carolina noted in a filing last week that the likely disappearance of cost-sharing reduction funding was a huge reason for its requested 22.9 percent hike.

"The biggest single reason for the sharp increase in rates is the lack of federal funding for 'cost-sharing reductions' beginning in 2018," the company said in a blog post. "If the federal funding continued, we would have filed an average increase of just 8.8 percent for 2018."

Individual Mandate

Insurers are also concerned the administration will not adequately enforce the individual mandate, which requires that most Americans carry health insurance. Some relatively healthy people may not buy coverage if they believe the Trump administration won't enforce the requirement. That will leave sicker, costlier patients in the pool with fewer healthier patients to balance their costs, driving up prices.

A study from the liberal Center for American Progress earlier this spring suggested premiums would rise about 7.2 percent in 2018 in markets across the country, absent the political uncertainty. They attribute that rise to increasing costs and the so-called health insurer tax.

Their economists calculated that the political uncertainty would add as much as 34 percent more to insurers' premium increase requests, if insurers decided to price their plans as though the cost-sharing reductions did not exist and the mandate would not be enforced.

CAP health economist Emily Gee said in a press release that even tweets from President Donald Trump suggesting he should let the market collapse for political gain contribute to insurers' uneasiness.

“Every threat to undermine health coverage for the American people contributes to uncertainty that will drive premiums up by hundreds of dollars," she said.

The same uncertainty is also keeping some plans from participating in the insurance marketplaces at all. Some states that already reported premium requests saw a number of participating insurance carriers drop out of their markets, partially or completely. Nationally, the health insurer Aetna, which last year withdrew from nearly all of the states in which it had been selling plans, announced it would withdraw from all the states in which it remained for 2018. Humana, too, announced earlier this year it would pull out from all of the exchanges in 2018.

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