Premium Hikes Not Just Caused by Government Policies

The health-care industry has been pretty well unified in decrying attempts by President Donald Trump and Republicans to “sabotage” Obamacare by repealing penalties for not having qualified coverage, ending payments to insurers to cover out-of-pocket expenses for low-income people, and proposals to expand plans that don’t comply with the Affordable Care Act.

Indeed, many point to those factors as being primarily responsible for what is shaping up to be another year of double-digit premium increases for ACA plans. The Congressional Budget Office expects premiums for benchmark plans on which subsidies are based to increase about 15 percent from 2018 to 2019, partly due to fewer healthier people buying insurance when the penalty is repealed in 2019.

But not everyone buys the argument that those factors are responsible for most of the increase expected in 2019.

“There’s going to be a slight bump due to the individual mandate and potential availability of alternative plans,” such as non-ACA compliant short-term limited-duration plans and association health plans, actuary Greg Fann of Axene Health Partners LLC in Temecula, Calif., told me.

The repeal of the penalty for not having insurance and the possibility of increased market share for noncompliant plans will account for a relatively small share of premium hikes next year, he said.

Carriers are still trying to figure out how to price for the Obamacare market, which has attracted a sicker population and fewer healthy people than originally expected, Fann said.

Among the four states that have publicized initial rate requests, CareFirst, Maryland’s dominant health insurer, filed a jaw-dropping request for a 91.4 percent increase next year.

CareFirst is likely to change its request if Maryland’s plan for a reinsurance program to compensate insurers for high claims is implemented, the company said.

But CareFirst also said it has lost more than $500 million covering ACA members since the exchanges and other major provisions of the law began in 2014, and that also likely has much to do with the company’s request for higher premiums.

America’s Health Insurance Plans (AHIP), which represents health insurers, recently released a paper estimating upcoming premium increases that it says will be caused by various government policies.

“We’re looking at another challenging year for the individual market with double-digit increases overall,” Greg Gierer, AHIP’s senior vice president of policy and regulatory affairs, told me.

Read my article here.

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