Obamacare may slow insurance rate hikes

Nonpartisan industry watchers say they expect big premium increases to hit less frequently in years to come
Associated Press
May 27, 2014

The wild hikes in health insurance rates that blindsided many Americans in recent years may become less frequent because of the health care overhaul.

Final rates for 2015 won't be out for months, but early filings from insurers suggest price increases of 10 percent or more. That may sound like a lot, but rates have risen as much as 20 or 30 percent in recent years.

The rates that emerge over the next few months for 2015 will carry considerable political weight, since they will come out before Republicans and Democrats settle their fight for Congressional control in next fall's midterm elections. Republicans are vowing to make failures of the law a main theme of their election push, and abnormally high premiums might bolster their argument.

In addition to insuring millions of uninsured people, the other great promise of the massive health care overhaul was to tame the rate hikes that had become commonplace in the market for individual insurance coverage.

No one expects price increases to go away, but some nonpartisan industry watchers say they do expect the big hikes to hit less frequently in the years to come, even though it's still early in the law's implementation. They point to competition and greater scrutiny fostered by the law as key factors.

Public insurance exchanges that debuted last fall and were created by the law make it easier for customers to compare prices. The overhaul also prevents insurers from rejecting customers because of their health.

That means someone who develops a health condition like high blood pressure isn't stuck in the same plan year after year because other insurers won't take her. She can now shop around.

The Urban Institute, a nonpartisan policy research organization, said in a recent report that competition will help restrain individual insurance prices next year.

And it could have a lasting impact once the new markets for coverage stabilize in a few years, said Larry Levitt, an insurance expert with the Kaiser Family Foundation, which analyzes health policy issues.

"Now if a plan tries to raise premiums a lot, people can vote with their feet and move to another plan," Levitt said.

Greater scrutiny by regulators could also keep rates from skyrocketing. The overhaul requires a mandatory review of rate increases larger than 10 percent, which can lead to public attention that insurers don't want.

"Nobody's going to get a rate increase unless they truly deserve it," said Dave Axene, a fellow of the Society of Actuaries, who is working with insurers in several states to figure out pricing. "The rigor that we had to go through to prove that the rates were reasonable, it's worse than an IRS audit at times."

To be sure, insurers and others in the field say it's too early to fully understand what pricing trends will emerge for individual insurance plans, which make up a small slice of the insured population. And some experts aren't convinced of any one outcome of the law.

Industry consultant Bob Laszewski called the idea that the exchanges will reign in prices by promoting competition an "unproven theory."

"No one has any idea what this risk really looks like yet and probably won't for two to three years," he said.

Karen Ignagni agrees. The CEO of the trade association America's Health Insurance Plans, which represents insurers, said competition between insurers will mean little if too many sick people sign up for coverage on the exchanges. Insurers need a balance between sick and healthy people to avoid big claim hits that lead to future rate hikes.

Laszewski expects some plans to seek either big premium increases or decreases in 2015, but he says that says nothing about the long-term implications of the overhaul. He noted that insurers entered 2014 without a good feel for what their competitors would charge, so price swings are inevitable as companies adjust.

Charmaine Piquette, 60, said she's "petrified" of a big increase for next year. "I finally feel like in my life I have a break and can afford to take care of myself even though I'm not living on very much a month," said Piquette, who lives outside Milwaukee.

Piquette used Wisconsin's public health insurance exchange in March to get coverage from the nonprofit insurance cooperative Common Ground. The plan costs her only about $177 a month thanks to a $500 tax credit she receives as part of the overhaul.

She lives mainly on about $1,200 a month in Social Security disability payments, but her health coverage helps her afford things like visits with a diabetes counselor to get her blood sugar back under control.

"I said, 'Praise the Lord' every single time I use this," she said.

 

Comments

Contango

Re: "some nonpartisan industry watchers say they do expect the big hikes to hit less frequently in the years to come, even though it's still early in the law's implementation."

"Less frequently," "still early," in other words: Mishegas.

There you go again

I thought families were "promised" to save $2500 per year-not price increases.

freespeech1

The New York Times, which broke the story, reports:

When employers provide coverage, their contributions, averaging more than $5,000 a year per employee, are not counted as taxable income to workers. But the Internal Revenue Service said employers could not meet their obligations under the health care law by simply reimbursing employees for some or all of their premium costs.

The IRS ruling is an effort by the Obama administration to stop employers with 50 or more workers from doing what critics of the health law said they would do: pay a penalty for not providing insurance and dump workers into the unpopular Obamacare program.

With the Nov. 4 midterm elections looming, the Obama administration could not allow massive waves of employer cancellations before Democrats face an already angry electorate. So the IRS ruled it would slap any employer with a $100 tax penalty per day per worker that used tax-exempt health insurance monies to cut workers a lump check and dump them on the Obamacare exchanges.

The new IRS rule comes on the heels of the Obama administration's announcement that it will bail out insurers which participate in the Obamacare program which lose cash. As the Times notes, "Administration officials hope the payments will stabilize premiums and prevent rate increases that could embarrass Democrats in this year’s midterm elections."

yeah obamacare is a good thing LMAO, comply or the IRS will be there to destroy you

Contango

"Report: FBI Launches Preliminary Investigation Into Oregon’s Failed Obamacare Exchange":

http://seattle.cbslocal.com/2014...

$250M and not one sign up?

Obamacare causing a slowdown in healthcare premiums?

More like typical Bolshevik Party propaganda, i.e., smoke and mirrors.

deertracker

Your point with that link? We all know you read pooh!

JACKEL

At least he can read ! One of the reasons the rates will slow, is because of The Old folks croaking. What do you think, someone made up that story. Of course you wouldn't read it being a member of Non Christian, Non Constitutional, Non American Party !

The Big Dog's back

He doesn't belong to the right wingnut party.

freespeech1

They don't make a bus short enough for you

JACKEL

The DNC claimed to be The Party Of The People and all our welcome ,unless you are a Gun Totin ,Christian Redneck. I am proud to be all those things. So The Right wing is a Gun Totin Christian
Party. We do not condone live birth abortions like you murderers !

jazzbo

Republicans like killing older humans.

freespeech1

Please give some factual evidence for your ridiculous statement. That being said, you seen what gov healthcare is like now since the VA scandal broke,and the lack of urgency from the liar and chief. This is the future of healthcare in the US. If you think otherwise your a fool. The scariest part is that 85% of VA employees are union, and we all know what kinda damage they can do to anything they get their grubby little hands on.

deertracker

Father time is undefeated Jackel!

AJ Oliver

If it were not for decades of sabotage by the right and the insurance companies, we would have had affordable health care for all long ago - like so many countries do. States that refuse to expand Medicaid are committing murder plain and simple. People need to be able to buy into any existing plan - that of Congress, Medicare, VA, whatever.
And the rightists' plan for health care reform is . . . is . . . (Crickets) . .they don't have one.

jazzbo

Exactly.

Contango

Re: "rightists' plan for health care reform"

A combination of high deductible health plans (HDHP) and health savings accounts (HSA) have work well for my spouse and myself for yrs.

Pres. Bush sought to expand them, the Dems quashed it.

Dr. Benjamin Carson is the latest proponent:

http://www.freep.com/article/201...

The Big Dog's back

free republic? You've sunk to an all time low.

Contango

ROFLMAO!!!

Detroit Free Press, putz.

Contango

Re: "expand Medicaid"

Medicare and Medicaid are subject to waste, fraud and abuse in the amt. of an estimated $60-100B annually.

The typical Bolshevik response:

Just hire more highly compensated govt. bureaucrats to oversee the system and 'fix' the problem.

Whatever the problem with govt., more of it is the Bolshevik answer.

The Big Dog's back

High deductible is not an alternative unless your employer is putting money into a HSA.

Contango

Re: "High deductible,"

Many Obamacare sign-ups went for the cheapest premium - high deductible.

Where are they gonna get the money to pay for the deductible?

Sticker shock!

http://finance.yahoo.com/news/ob...

doglegright

The whole reason for the "wild hikes" in the first place was Obamacare. Now this article acts as if Obamacare will be the solution because of "healthcare overhaul" bbbbwaaaaaahhhhaaaa!!!!

Contango

FYI:

The modern health and welfare state was first enacted under Prussian authoritarian and autocrat Otto von Bismarck.

http://en.wikipedia.org/wiki/Ott...

Little wonder that socialists prefer heavy-handed govt. control to the use of the free mkt.

coasterfan

Life inside the Fox Bubble. Even when a non-partisan group says the law is working, they don't allow any new information/facts/ statistics to get in the way of their partisan misinformation campaign.

deertracker

Agreed!

KnuckleDragger

^as usual, when unable to win an argument by presenting facts pull out one of three replies, 1) Fox News, 2) It must be Bush's fault, 3) throw out the race card. Proving with each response that you are an idiot!

AJ Oliver

So now Canada is not only totalitarian, but Bolshevik too? What a sense of humor !!

KnuckleDragger

Private hospitals along our nations border with Canada absolutely love Canada's health care system. Good 'ole American private healthcare is making billions off of Canada's failure.

Contango

Re: "Canada,"

"Canada ranked last among OECD countries in health care wait times,"

http://www.ctvnews.ca/health/can...

Yea, looks like a good model for U.S. single-payer. :)

Dr. Information

"may" is a word that does not mean for certain. Of course you left wingnuts can't figure that out. You will polish this turd until your hands are brown.

looking around

"Piquette used Wisconsin's public health insurance exchange in March to get coverage from the nonprofit insurance cooperative Common Ground. The plan costs her only about $177 a month thanks to a $500 tax credit she receives as part of the overhaul.

She lives mainly on about $1,200 a month in Social Security disability payments, but her health coverage helps her afford things like visits with a diabetes counselor to get her blood sugar back under control.

"I said, 'Praise the Lord' every single time I use this," she said."

I hear this more and more frequently in my travels. It seems to me that for those that are taking advantage of the Affordable Health Care Act and seeking insurance through the exchanges appear to be very grateful to have it and it seems to be working.

Pages