Obamacare enrollees should be ready for higher premiums next year, with recent analyses pointing to double-digit increases, a trend that is raising concerns about the future of the program.
Insurers are seeking double-digit increases in several states, an average of a nearly 24 percent bump from this year’s prices, according to an independent analysis from Charles Gaba, who runs a website that tracks Obamacare enrollment.
For instance, Blue Cross/Blue Shield requested rate increases of nearly 40 percent on some plans in Alabama, according to a report from the Associated Press.
Insurers that want to offer Obamacare plans have to disclose any proposed increases above 10 percent for the next coverage year. The state regulator then negotiates with the insurer and often gets the rate lowered.
Gaba pointed to significant changes in the requested rate filings for four states: Arizona, Connecticut, Maryland and Tennessee.
In Tennessee, insurance regulators allowed insurers Humana and Cigna to refile their rate requests to ask for higher rates. Cigna was asking for a 23 percent increase initially and now wants a 46 percent increase, and Humana wants 44 percent after asking for nearly 30 percent, according to the Tennessean newspaper.
Tennessee Sen. Lamar Alexander bashed the proposed bigger increases last week, and said the increases are the latest evidence the law is “spiraling out of control.”
Only five states have finalized their rates for the 2017 coverage year: Mississippi (nearly 16 percent increase), New York (16 percent), Oregon (23 percent), Rhode Island (1 percent) and Vermont (7 percent), according to Gaba.
Experts say more mature states generally will have more stable price trends, said Katherine Hempstead, senior adviser at the nonpartisan Robert Wood Johnson Foundation.
However, the increases are likely to have an impact on the fourth open enrollment set to start on Nov. 1, she added.
“These increases will not be welcomed by consumers, who will probably redouble their efforts to shop for value during open enrollment,” she said.
Other experts say that the premiums won’t likely affect enrollment because “such a high percentage of people get premium subsidies,” said Caroline Pearson, vice president with the research firm Avalere Health.
More than 80 percent of Obamacare enrollees receive some form of subsidy to help pay for the cost of health insurance.
However, Pearson said that while high premiums won’t significantly affect enrollment, the trend is a serious concern about the stability of the marketplace.
“I think they reflect the fact that the risk pool is significantly worse than we expected at this point in time,” she said. “Enrollment continues to be significantly lower than initial projections.”
Part of the reason for higher premiums is a market correction, as insurers largely underpriced plans when Obamacare went online in 2014. As sicker-than-expected enrollees signed up, lower priced plans weren’t able to cover medical costs, which is why “you see health plans reporting losses.”
Some insurers have fled Obamacare due to concerns about profitability. For instance, UnitedHealth expects to lose about $600 million this year in Obamacare and is leaving most of the 34 states it has Obamacare plans in. Aetna said Monday night it would slash its participation in Obamacare by two-thirds.
Other major insurers such as Anthem Blue Cross/Blue Shield remain committed and believe the markets will stabilize.
Another reason for the spikes is the expiration of a reinsurance program next year. The program helps cover losses for insurers and acts as a way to mitigate Obamacare losses while the market adjusts.
But the high prices may not just be a one-time market correction.
If the risk pool doesn’t improve, then we “could continue to see premiums rise,” Pearson said.
The administration has pointed to new data that shows the medical costs per enrollee stayed roughly the same from 2014 to 2015. The administration hinted that higher enrollment and a healthier population point to an improving risk pool.
Pearson said that the administration can take some actions in the next open enrollment to mitigate the high risk pool.
“Fundamentally I think they need to improve enrollment or they probably have to put in more federal money for a high-risk pool,” she said.
The Obama administration has not announced a goal for signups for open enrollment, which stretches to Jan. 31.
