Premiums Rising Over Uncertainty

Health insurance premiums rising

Our congressmen are moving too slowly.  Unfortunately, little help can be expected to come from them.

Insurance companies have only a few weeks left to finalize their rate plans for 2018. Most have proposed increases about on the order seen last year. The rates are not yet final. Insurers are likely to revise them upward unless the Republicans show a willingness to stabilize the exchanges. Some insurers may yet decide to play it safe and exit the individual markets.

Insurers are raising rates to compensate for an expected increase in health care costs next year. But they have also been quite vocal about citing the Trump administration’s comments and actions as a substantial factor in their determination of higher prices for next year.

Insurers have to try to predict how the Trump administration will act. There is real fear that the individual mandate will not be enforced.  And the President has repeated threatened to withhold cost-sharing reduction subsidies.

Some plans in Idaho are requesting increases as high as 45 percent.  A good half of that because of uncertainty about whether the cost-sharing reduction subsidies will be paid or not. It isn’t a matter of trying to rake in more profits. It is more of an uncertainty charge. They are trying to cover their estimated costs to insure the people in their plan area.

Blue Cross in Washington State is estimating they may need to factor in an additional 4 or 5 percent to cover for weak enforcement of the individual mandate.  And if cost-sharing reductions are not assured for next year they will need to ask for even larger premium increases.

♦ A new study by the Kaiser Foundation suggests that many of the Obamacare markets are stabilizing and should not experience the steep price increases seen last year. This is in contrast to comments coming out the Department of Health and Human Services, which seems more focused on tearing down Obamacare than proposing solutions to fix it.  Final rate requests could throw the study's results out of whack.

High premiums will make the news and add to political fighting but what will not be made clear is who will be affected.

♦ The main people affected number around 10 million. This is no small number. People who buy their own insurance but earn too much to get a subsidy. These people will be really squeezed. The GOP could have easily helped these people but instead they chose to go another route which ending in nothing.

Unless a rabbit is pulled out of the hat as the last minute this group of Americans will have to suffer another year.

The Kaiser Foundation reports that the unsubsidized second-lowest silver plan in Wilmington, DE could see an increase of 49% from $423 to $631 per month for a 40-year-old non-smoker.  Similarly in Albuquerque, NM this same 40-year old non-smoker may see up to a 34% increase from $258 to $346 per month.

♦ Most of the other people purchasing their own insurance will receive a government subsidy. And the way the Affordable Care Act is structured if premiums increase the subsidies increase also. It is unlikely that anyone will end up paying less next year but with subsidy support they are not likely to experience major price increases either.

The majority of Americans receive health insurance through their employer. Most of these people pay little attention to the healthcare debate. They really should.

Health care costs continue to skyrocket and no employer plan can be sustained without rate increases or more of the healthcare expenses shifting to the employee. Some of the larger companies can absorb additional costs to retain talented workers. But smaller companies are already feeling the pain.

Inaction in Washington is just making the situation worse.