At a July town hall in Nashville, Tenn., President Barack Obama played down fears of a spike in health insurance premiums in his signature health law’s third year.
“My expectation is that they’ll come in significantly lower than what’s being requested,” he said, saying Tennesseans had to work to ensure the state’s insurance commissioner “does their job in not just passively reviewing the rates, but really asking, ‘OK, what is it that you are looking for here? Why would you need very high premiums?’”
That commissioner, Julie Mix McPeak, answered on Friday by greenlighting the full 36.3% increase sought by the biggest health plan in the state, BlueCross BlueShield of Tennessee. She said the insurer demonstrated the hefty increase for 2016 was needed to cover higher-than-expected claims from sick people who signed up for individual policies in the first two years of the Affordable Care Act.
Several regulators around the country agree with her, and have approved all or most of the big premium increases sought by the largest health plans in their states for the new sign-up season that begins Nov. 1.
Not all states have made their rate decisions, and some have approved relatively modest increases. A number of the states with lower average increases this year had higher rates to begin with. Some also fared better with enrollment under the law. Insurance premiums vary from state to state, for a number of reasons including regional disparities in the costs of care.
Still, the upsurge is likely to be a big talking point not only during the three-month enrollment season, but through the 2016 campaigns, where GOP opponents of the law are expected to use it as a defining issue against their Democratic rivals.
The law provides for government subsidies in the form of tax credits for some consumers who buy insurance on their own because they don’t have coverage through a job or government program such as Medicare. Those subsidies will blunt the impact of price increases for individuals who get them, but the tab is picked up by the federal government.
White House spokeswoman Katie Hill said rate review processes, which were beefed up under the law, had helped lower proposed premiums “in a number of states.” She also said that under the health law, it was easier for customers to switch to a new insurer.
“Last year, more than half of re-enrolling customers on HealthCare.gov actively shopped and selected a new plan, something that wasn’t possible for many consumers prior to the ACA due to the risk of being charged a higher premium or denied coverage entirely due to a pre-existing condition,” she said.
Tennessee’s Ms. McPeak said she’s required to protect state residents by blocking unjustified increases but also guaranteeing that health plans stay financially sound. “Politics, and any opposition to the ACA, doesn’t have anything to do with it,” she said. “Do I wish they were lower? Absolutely, because I know what it means to consumers.”
Kentucky Insurance Commissioner Sharon Clark approved the 25.1% increase requested by the Kentucky Health Cooperative, the largest insurer on the state’s insurance exchange. Kentucky has taken a more supportive stance toward the health law, including operating its own insurance exchange rather than using the federal government’s HealthCare.gov.
“We’re lucky” by comparison to Tennessee, Ms. Clark said.
Oregon’s Laura Cali allowed an average 25.6% increase for Moda Health Plan Inc., the biggest plan on that state’s exchange. In Ohio, Lt. Gov. Mary Taylor approved a 14.5% increase from Medical Mutual. In Michigan, BlueCross BlueShield won approval for the average 11.4% increase from insurance director Patrick McPharlin.
In Idaho, insurance director Dean Cameron said that an average 23% increase by Blue Cross of Idaho Health Service Inc., was disappointing but “not unreasonable” and that he didn’t have the power to stop it.
The 2010 federal health law overhauled the way insurance is priced and sold, requiring companies to allow anyone to buy policies, regardless of their medical history and with only limited variation in premiums based on their age.
Many of the most popular plans in the country offered low rates for the first and second year of the law’s rollout, unsure what to expect but eager to snap up the new business. That was especially true in Tennessee, which had some of the lowest premiums in the U.S. initially.
Now, insurers have found that business has been more costly than expected. Some have said they’ve incurred steep losses. The American Academy of Actuaries also said in a recent paper that some programs designed to cushion insurers against high-risk enrollees are ending.
Some people will be able to switch plans and pay a modest increase from 2015, according to an analysis of proposed rates earlier this year by the consulting firm Avalere Health LLC.
For the Obama administration, that means a stepped-up campaign this fall to persuade people to return to HealthCare.gov and shop around in the coming open enrollment season.
The administration said late Tuesday it would automatically renew the coverage of people who signed up through the site last year and don’t come back to it by Dec. 15 this year.
The administration said that for the current year, about half of the site’s users returned. Of those, about half switched insurance providers and half opted to stay with the one they had.
States that were able to keep rate increases down breathed a sigh of relief this week. In Indiana, Anthem Inc. had asked for, and was granted, a 3.8% average increase. In Virginia, Anthem reduced an initial request of 13.2% to 8.6%. In Arkansas, BlueCross and BlueShield was approved for an average increase of 7.15%.
Corrections & Amplifications
Some insurers say they have incurred steep losses from sicker than expected enrollees. An earlier version of this story incorrectly said an American Academy of Actuaries paper made that conclusion.