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In case you have not already heard, health insurance companies operating on the ObamaCare exchanges in several states have requested big premium increases for health plans that will be available in the 2016 open enrollment period. Insurers have cited a higher utilization of healthcare as one of the reasons for the proposed increases, which must be approved by state regulators. In short, in many instances, they are paying out more in claims than they are receiving in premiums.
A report released on Wednesday by Agile Health Insurance offers some details on the extent of the rate increases. Insurers request increases on a plan-by-plan basis with justification for the hike required. The report is based on a review of products, which, as it notes, "is a collection of plans from the same insurer" and "may contain plans with different metal levels."
Some plans may not be utilized as frequently as others, meaning plans are either profitable or premiums received keep pace with claims paid out. As a result, proposed rate increases may stay in the low to high single digits. But in ten states, insurers have asked for double-digit premium increases for at least half of the health products offered on the exchanges.
"Double-digit proposed rate hikes were the norm in several states that used the federal Obamacare exchange," Agile Health Insurance notes in the report. "All Obamacare individual products on the exchange in Delaware, South Dakota, and West Virginia had double-digit proposed rate hikes for 2016."
ObamaCare products in seven other states may see double-digit increases -- Montana (86 percent), Utah (83 percent), Louisana (75 percent), North Carolina (75 percent), Iowa (73 percent), North Dakota (67 percent), and Nevada (50 percent). Increases between 39 and 46 percent have been requested in five states, including Georgia, Virginia, and Pennsylvania. Only three states -- Arkansas, Maine, and Mississippi -- have no products with double-digit rate hikes.
One potential problem here is that consumers are automatically re-enrolled in the ObamaCare plans they selected. Though they are urged to shop to select different and, perhaps, more "affordable" plans, a recent survey conducted by Deloitte Center for Health Solutions found that 45 percent of ObamaCare enrollees switched plans. Those who did not saw premium increases of up to 20 percent.
President Barack Obama has urged the public to pressure insurance commissioners and regulators to reject big premium increase requests from insurers. Just last month, Health Insurance Marketplace CEO Kevin Counihan, who oversees HealthCare.gov, penned a letter to insurance commissioners arguing that large increases are not necessary.
Plans available for sale on the ObamaCare exchanges are required to offer certain benefits that drive up the cost of health insurance coverage. Though subsidies may diminish the cost impact to eligible consumers, taxpayers are expected to pick up the tab to the tune of $1 trillion between 2016 and 2025. Cost may still be an issue for many consumers, while others may not be thrilled about the sparse physician networks for available ObamaCare plans.
With this in mind, consider a thought recently offered by health insurance market analyst Robert Laszewski: "After all of this and two complete open enrollments, only 40% of those who are eligible for Obamacare have signed up -- far below the proportion of the market insurers have historically needed to assure a sustainable risk pool." He went on to note that "[i]f this were a private enterprise enjoying these kinds of benefits, and only sold its product to 40% of the market, its CEO would be fired."
Those who need coverage and/or cannot afford may find what ObamaCare plans offer attractive, but those who are used to getting more out of their coverage may simply decide to pass on pricey health plans that are not amenable to their financial situations or need for coverage. The result is a thinning out of the available risk pools that, you guessed it, leads to higher insurance premiums.