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The proposed Obamacare premium rates for 2016 are likely to see many double digit increases from the largest providers. The states with the largest increases, as proposed, are New Mexico (51%), Tennessee (36%), Maryland (30%), and Oregon (25%). The final rates will be lower, but they may very well remain in the double-digits because insurers are seeing their first full year of claims data from ObamaCare’s exchanges, and the pool of insurance consumers on the exchanges are tending to be older and sicker than they were hoping to see.
The U.S. Department of Health and Human Services originally projected that for the exchanges to be financially stable; at least 40% of those enrolling in health care must be ages 18-35. So far, that figure is only 28%. But, as opponents of ObamaCare have been predicting for years, healthier and younger people have little incentive to join the exchanges because ObamaCare passes so much of the cost of more expensive patients onto them.
Since these low-cost patients aren’t coming on board in the necessary numbers, insurers are taking losses on the plans they sell through the exchanges. As Bloomberg’s Megan McArdle points out, the larger insurers can afford to take some losses on these individual plans because the exchanges are a smaller part of their overall portfolio. But in order to keep those losses tolerable, they are going to have to be allowed to increase premiums at a rate much higher than what consumers were led to expect from the “Affordable Care Act”. For example, Tennessee Insurance Commissioner Julie Mix McPeak said that although her team would try and argue down the 36% rate increase requested by BlueCross BlueShield in her state, they generally confirmed the insurers’ claims expenses, making large premium increases likely. Of course, these rate increases are on top of the cost spikes of the past couple of years, where many plans on the individuals markets have already seen double- and even triple-digit premium hikes.
Of course, even for those who have insurance coverage through the exchanges, their cost of care may still be too high. According to a study published by health care nonprofit Families USA one in four adults who purchased insurance under Obamacare skipped necessary medical care because it was still too expensive. High deductibles and copays in some of the less expensive exchange plans have meant that merely being insured isn’t ensuring adequate care for many patients.
This continued financial misery underscores the importance of Congress continuing to fight to replace ObamaCare’s unsustainable structure with principled reforms that incentivize competition, lower costs, and better outcomes for patients.