Obamacare is experiencing some “growing pains,” but double-digit rate hikes for 2017 plans won’t doom the law, according to a top administration official.
“We are in the growing pains of this new enterprise,” said Andy Slavitt, acting administrator for the Centers for Medicare and Medicaid Services. “The president specifically pointed to real problems that the Affordable Care Act needs to address to make it work better.”
Slavitt, speaking at an administration forum about the Obamacare marketplace Wednesday, sought to address concerns about insurers leaving the marketplace and sharp price increases facing consumers.
An independent estimate from the website acasignups.net finds that 25 states will have an average rate hike of nearly 25 percent. Some states have announced double-digit increases, such as Oklahoma, where residents will face an average hike of 76 percent.
Oklahoma is one of five states that will have only one Obamacare insurer, alongside South Carolina, Wyoming, Alaska and Alabama.
Those states and others were hit hard by major defections from insurance giants Aetna and UnitedHealth. Both insurers will drastically shrink their marketplace presence next year due to major losses, with UnitedHealth saying it will lose $600 million this year from Obamacare.
Slavitt said that insurers are raising their rates so much partly because plans were underpriced when the marketplace started in 2014.
“Nobody knew what it would cost to cover sick people,” he said. “We are still learning that.”
He pointed out that average premiums are still 18 percent below what was initially projected by the Congressional Budget Office.
“Rates will adjust and as they do, the Affordable Care Act will protect consumers with tax credits and rebates if rates go up too much,” he added.
More than 80 percent of Obamacare enrollees receive tax credits to pay down the cost of monthly premiums. An administration report identified another 2.6 million people eligible for the credits.
Slavitt joined his boss, Health and Human Services Secretary Sylvia Burwell, in offering a robust defense of Obamacare before open enrollment starts Nov. 1. Burwell said earlier Wednesday that the law has “encountered bumps along the way.”
She said she was confident that the administration could sign up more younger and healthier enrollees to balance out the law’s risk pool and help keep the medical claims costs for insurers down.
The administration laid out new outreach efforts including advertising on the video streaming site Twitch.
“With three years of experience, we’re in a position to mount a more targeted, data-driven outreach than ever before,” Burwell said.
