Health industry officials say ObamaCare-related premiums will double in some parts of the country, countering claims recently made by the administration.

Thursday, March 20, 2014

Health industry officials say ObamaCare-related premiums will double in some parts of the country, countering claims recently made by the administration.

The New American

Huge Increases in ObamaCare Premiums Are Coming

Written by Bob Adelmann

When Health and Human Services (HHS) Secretary Kathleen Sebelius sought to quell concerns about rising premiums under ObamaCare last week, she said: “The increases [we’re seeing] are far less significant than what they were prior to the Affordable Care Act.” This was an echo of a representative of Sebelius at HHS, Joanne Peters, who told Fox News, “Since the Affordable Care Act became law, health-care costs have been slowing and premium growth has slowed to the lowest rate in years ... making it easier for [small] businesses to offer coverage.”
These claims surprised health insurance company officials, who have been wrestling with the massive takeover by the government and trying to charge enough to stay solvent. Said one official, on conditions of anonymity: “[These comments are] pretty shortsighted … everybody knows that [ObamaCare] is going to lead to higher costs.” Privately, the same official said that his company, located in a large swing state, expects to triple its rates next year.
Another insurance company official stated: “We’re exasperated. All of these major delays on very significant portions of the law are going to change what it’s going to cost.” Bill Hoagland, a former executive at health insurance company CIGNA, agreed: “My gut tells me that, for some people, these increases will be significant.”

Analysts have been trying to estimate precisely what those cost increases are likely to be. Three economists with the Manhattan Institute made their first estimate last September, expanded it later that month, and issued a further broader report in November. Writing in Forbes, one of them said the average increase will be more than 40 percent over current premiums, with some insureds seeing their premiums double:

This nearly-complete analysis finds that the average state will face underlying premium increases of 41 percent.

Men will have the steepest increases: 77, 37, and 47 percent for 27-year-olds, 40-year-olds, and 64-year-olds, respectively….

The eight states that will face the biggest increases in underlying premiums are: Nevada (+179 percent), New Mexico (+142 percent), Arkansas (+138 percent), North Carolina (+136 percent), Vermont (+117 percent), Georgia (+92 percent), South Dakota (+77 percent) and Nebraska (+74 percent).

The reason young men will suffer the biggest increases under ObamaCare is because they are the healthiest and, under the program, will be expected to carry most of the burden for the others, including women who use more healthcare services than men. ObamaCare requires insurers to charge them the same as men. And older people, who consume up to six times the services that young people do, may not, under those rules, be charged more than three times their premiums.
There’s also the matter of subsidies, which, because oldsters pay more, will qualify them for higher subsidies. Wrote one of the authors of that study, Avik Roy:

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The Hill

O-Care premiums to skyrocket

By Elise Viebeck

Health industry officials say ObamaCare-related premiums will double in some parts of the country, countering claims recently made by the administration.
The expected rate hikes will be announced in the coming months amid an intense election year, when control of the Senate is up for grabs. The sticker shock would likely bolster the GOP’s prospects in November and hamper ObamaCare insurance enrollment efforts in 2015.
The industry complaints come less than a week after Health and Human Services (HHS) Secretary Kathleen Sebelius sought to downplay concerns about rising premiums in the healthcare sector. She told lawmakers rates would increase in 2015 but grow more slowly than in the past.
“The increases are far less significant than what they were prior to the Affordable Care Act,” the secretary said in testimony before the House Ways and Means Committee.
Her comment baffled insurance officials, who said it runs counter to the industry’s consensus about next year.
“It’s pretty shortsighted because I think everybody knows that the way the exchange has rolled out … is going to lead to higher costs,” said one senior insurance executive who requested anonymity.
The insurance official, who hails from a populous swing state, said his company expects to triple its rates next year on the ObamaCare exchange.
The hikes are expected to vary substantially by region, state and carrier.
Areas of the country with older, sicker or smaller populations are likely to be hit hardest, while others might not see substantial increases at all.
Several major companies have been bullish on the healthcare law as a growth opportunity. With investors, especially, the firms downplay the consequences of more older, sicker enrollees in the risk pool.
Much will depend on how firms are coping with the healthcare law’s raft of new fees and regulatory restrictions, according to another industry official.
Some insurers initially underpriced their policies to begin with, expecting to raise rates in the second year.
Others, especially in larger states, will continue to hold rates low in order to remain competitive.
After this story was published, the administration pointed to some independent analyses that have cast doubt on whether the current mix of enrollees will lead to premium hikes.
ObamaCare also includes several programs designed to ease the transition and stave off premium increases. Reinsurance, for example, will send payments to insurers to help shoulder the cost of covering sick patients.
But insurance officials are quick to emphasize that any spikes would be a consequence of delays and changes in ObamaCare’s rollout.

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