Double-Digit Premium Increases For Obamacare Plans A Recurring Theme

Obamacare’s 4^th round of Exchange enrollment isn’t too far off. The process comes with plenty of recurring themes. Here’s two for starters:

#1: Double-Digit premium increases

In a media briefing earlier this week, Brian Tajlili, director of actuarial pricing services with Blue Cross and Blue Shield of North Carolina (BCBSNC), announced that the state’s largest health insurer is asking the Department of Insurance (DOI) for an average 18.8 percent rate increase for its 2017 health plans sold to consumers who don’t receive insurance through their employer or government programs like Medicare and Medicaid. Aetna, the state’s only other insurance carrier selling individual policies on the Exchange – seeks approval for an average 24 percent increase in policyholders’ premiums.

For BCBS, the projected rise in premiums is far less than last year’s approved average rate increase of 32 percent. Aetna’s average increase remains consistent. Tajlili mentioned that premiums were more steep for 2016 plans to make up for higher-than-anticipated medical claims incurred by Obamacare policyholders in the year prior. With more data on health care service usage from this line of business, the insurer now has a better grasp on how to price the pool. The company’s press release notes that premium rates reflect rising prices for generic and specialty brand drugs, unnecessary emergency room utilization, and higher volumes of orthopedic surgeries. He further emphasized that while it’s a good thing more people have insurance, it comes at a cost – largely due to the stringent parameters Obamacare forces insurance companies to comply by.

#2: U.S. Department of Health and Human Services (DHHS) On The Defense

 Prior to health insurers filing their proposed rates to be reviewed by DOI, DHHS issued a brief, touting that it debunks the myth in which North Carolina exchange enrollees are experiencing severe cases of rate shock:

“Initial issuer rate filings do not provide sufficient information to predict what premiums Marketplace consumers will actually pay next year because they do not account for rate review, consumer shopping behavior, or tax credits. For plan year 2016, early estimates based on rate filings alone suggested higher premium increases than what Marketplace consumers paid”.

Yes, the government makes a point that the rate increases represent the underlying cost of health insurance, in which subsidies have yet to be factored in for those eligible. But the underlying cost of health plans now demonstrate that subsidies make health insurance a lot more expensive for those that don’t qualify for them and even for those that do qualify.

In North Carolina, 89 percent of Exchange enrollees received financial assistance that offset the cost of their health insurance premium. According to the government, premiums rose on average by a mere 3 percent when subsidies are accounted for. Yet the government failed to factor in its calculation the number of people who don’t receive subsidies (i.e. those 67,000 burdened with the actual cost of Obamacare plans). So much for data integrity.