By Louise Radnofsky and Stephanie Armour
WASHINGTON -- The first handful of states to release approved
rates for people who buy health insurance on their own are so far
consistent with what many expected: significant increases in
premiums for 2017.
The Obama administration, seeking to reassure consumers who
could be concerned by increases in more states in the coming weeks,
released an analysis showing financial help from the government
could soften the blow for people who qualified.
Some insurance regulators have begun announcing their approval
of rate increases, including an average jump of 62% for the biggest
plan in Tennessee and increases of around 43% in Mississippi and
23% in Kentucky for large carriers.
The Department of Health and Human Services said in an analysis
issued on Wednesday that tax credits available to some lower- and
middle-income Americans, which are pegged to the cost of insurance
in a particular area, would blunt the impact and ensure that around
three quarters of the people who obtained insurance through
HealthCare.gov would pay $75 a month or less.
"Headline rate increases do not reflect what consumers actually
pay," said Kathryn Martin, acting assistant secretary for planning
and evaluation at the department, which also said the federal
government was still on track to spend less on the law than
originally forecast by the Congressional Budget Office.
Health plans, stung by large losses in the rocky early years of
implementation of the 2010 health law, say they need to raise
prices substantially to stay afloat.
Federal officials say some of the increases reflect the planned
end of provisions in the law designed to cushion insurers and that
other shifts are predictable, as plans adjust to the law's overhaul
of insurance pricing to require it to be sold equally to all
customers regardless of medical history or risk.
But some regulators say they are facing an unusually difficult
scenario in which they had to choose between agreeing to the price
increases or seeing the plans withdrawn from some markets entirely,
as large insurers Aetna Inc. and UnitedHealthcare have already
begun doing.
In Tennessee, the state insurance commissioner approved a 62%
average rate increase for individual plans sold by BlueCross
BlueShield Tennessee, the market leader. The state also approved a
46.3% increase for Cigna Corp. and 44.3% jump for Humana Inc.
Tennessee Commissioner Julie Mix McPeak said she had allowed
Cigna and Humana to refile their proposals to seek higher rates
than they had previously for 2017, something she had not allowed
last year. "Two of the three health plans said they'd like to
refile rates or they'd have to leave," she said. "We were very
concerned it would be a domino effect. This year I felt I didn't
have much of a choice."
She said actuaries reviewed the rate increase requests for 2017
and found they were justified. Insurers early in the launch of the
exchange had priced premiums relatively low but had hefty claim
costs. Ms. McPeak said it was unclear whether the costs are being
driven by consumers who are sicker and have higher expenses than
expected, or because consumers getting insured are using more
health services.
"The rates are terrible for our consumers," she said. "The rates
are increasing drastically. The problem in Tennessee is we had
extremely high claims costs and low premiums to begin with."
The Department of Health and Human Services modeled a
hypothetical scenario, it said, in which rates increased by
averages of 25%.
Final rates will trickle out of the states and federal
government over the next few months ahead of a Nov. 1 date for the
new sign-up window. Around 9.6 million people signed up for
coverage through HealthCare.gov during the main enrollment period
last year, the federal government has said.
Estimates vary for how many people get individual coverage
without using the site or a state equivalent, but the figure likely
numbers several million. The health law's pricing rules apply to
almost all individual health plans, regardless of whether they are
sold through HealthCare.gov or independently.
Full premiums are borne by people who don't use the site, as
well as all people with incomes above four times the poverty line,
or $47,520 for a single person. The value of tax credits is on a
sliding scale in which they eventually peter out.
The Obama administration and insurers are still trying to expand
the number of enrollees in HealthCare.gov and state equivalents in
a bid to turn the tide.
Higher rates typically push down enrollment, especially among
people who don't feel they badly need health care, which can lead
to a cycle of falling enrollment and rate increases.
Many insurers have said they need a larger and more mixed group
of enrollees than they currently have in many places to ensure that
the health law's markets stabilize.
"We've got to get a balanced risk pool, which means we need more
healthy people," said Patrick Getzen, chief actuary of Blue Cross
and Blue Shield of North Carolina, which has said it requested an
18.8% increase for its individual plans for next year after seeing
rising costs that led to sharply increased losses on Affordable
Care Act plans in 2015. The insurer said it has yet to resolve
final 2017 rates with North Carolina's regulator.
In Kentucky, Anthem Inc. sought and won an increase of 22.9%.
Humana asked for 33.7% and was granted 31%, the insurance
regulator's office said.
In Mississippi, Humana has been approved for a 43% increase,
said insurance commissioner Mike Chaney. In Virginia, Anthem has
been granted its request for a 15.8% increase.
--Anna Wilde Mathews contributed to this article.
Write to Louise Radnofsky at louise.radnofsky@wsj.com and
Stephanie Armour at stephanie.armour@wsj.com
(END) Dow Jones Newswires
August 24, 2016 16:41 ET (20:41 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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