Obamacare

Two Signs That Health Premiums May Be Set for Big Hikes Under Obamacare

In Oregon, double-digit price hikes are already on the way.

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Whitehouse.gov

One of the big unanswered questions about Obamacare is what will happen to health insurance premiums over the next several years. Since the law's coverage expansion kicked in last year, there have been persistent rumors and reports that health insurers were knowingly under-pricing their offerings, testing the waters and, perhaps, attempting to gain market share early on. Initial premium prices were, unavoidably, set with little real data on the people who would enroll, and thus without a strong indication about the expenses that plans could expect incur.

In addition, health insurance plans were given a backstop during the early years of Obamacare's coverage expansion in the form of a trio of risk mitigation programs, including the law's risk corridors, a three-year program, often labeled an insurer bailout, designed to cover a portion of insurer losses should spending go beyond expected level. (Insurers whose costs were lower than expected would help defray the cost of the program by paying into the system, in theory making the system more or less self-supporting.) The hope was that this would give insurers some leeway to keep premiums from rising too much, at least initially.

The question all these variables raised was what would happen to premiums once data came in about the health characteristics of the newly insured, and once the risk corridor backstop expired.

But now there's a new variable: The risk corridors, if operated in a budget neutral manner as the administration has suggested, may be seriously underfunded. An S&P analysis released at the end of last week warns that the risk corridor program could be "significantly underfunded if the government enforces budget neutrality." (The federal government has pledged neutrality, and a provision in the 2015 "cromnibus" set limits on where the feds can go for extra funding.)

That's because, in order for the program to remain budget neutral in the way that it was intended, there have to be enough insurers have to be more profitable than expected to balance out the insurers that are less profitable than expected. And that doesn't appear to be happening. The S&P report estimates that Obamacare's risk corridors "will not receive adequate monies from insurers with profitable exchange business to pay insurers that have unprofitable exchange business." Basically, at current cost and premium levels, Obamacare's insurance plans can't yet support themselves.

So the question now is: What happens if there's not enough money to make the risk corridor payouts?

One possible answer is…nothing, or not much, anyway. Some insurers appear not to be building risk corridor payments into their expectations at this point. And, as the Pittsburgh Tribune-Review notes, the Department of Health and Human Services is thinking about the program's financing on a three-year basis rather than a year at a time. So if business improves and insurers pay into the system later, HHS says, "it expects to cover shortfalls in the first year from gains in later years of the three-year program," although the S&P analysis appears to be skeptical.

But it's also possible that the end result will be higher premiums. As one S&P analyst told the Tribune in an earlier story, "there is a likelihood that premiums will go up" if the payments aren't made. 

You could perhaps argue that the real problem is holding the risk corridors program to a revenue neutral standard. But that is both a tacit admission that insurers can't really survive under the law without additional government funding, and, at best, a temporary solution given that the program was set to expire after three years anyway. 

Meanwhile, there are hints that some insurers may already be looking at big rate hikes for next year. In Oregon, all but one of the insurers who have submitted rate proposals for next year are asking for significant rate hikes, reports local paper The Bulletin:

The largest proposed increase comes from Time Insurance Company, which had 582 individual market enrollees as of last month. The second-largest hike comes from PacificSource Health Plans, which wants to raise premiums by nearly 43 percent. PacificSource has about 9,100 individual market enrollees. LifeWise Health Plan of Oregon, with 37,000 individual market enrollees, wants to raise premiums by 38.5 percent.

Most individual market enrollees will be affected by the rate hike proposed by Moda Health, which has far and away the largest number of enrollees: more than 101,000. Moda wants to raise premiums by 25.6 percent. If approved, that means a 40-year-old single smoker in Bend would pay $319 for a silver plan.

The Kaiser Foundation plan, with 15,500 enrollees, requested a small decrease in rates.

These are, of course, unsubsidized rates, so most individuals would only pay a portion of the full rate. But even still, those who chose to stay with the same plan would be paying somewhat more in many cases, and taxpayers would be on the hook for any increase in subsidies.

Why are insurers pushing for such big hikes? In part because rates are negotiations with regulators, and there's a general expectation that increases will be moderated through the rate regulation process. But as the story also notes, this is the first time that insurers operating under the law have access to a full year's worth of claims data—which suggests that insurers may have discovered that their beneficiaries are more costly to cover than expected.

These are early signs, and all of this is subject to change as more information comes in. Overall, last year's Obamacare rate hikes were not nearly as large as initially feared. Still, this is not a promising set of early indicators. And taken together, they highlight some of the complexities inherent in Obamacare, and the potential difficulties in restraining the growth of health insurance premiums under the law. At minimum, they suggest that there's a lot we still don't know about the law and how it will develop over the years. 

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115 responses to “Two Signs That Health Premiums May Be Set for Big Hikes Under Obamacare

  1. They are gonna fucking RUN on Obamacare. It will be that successful. Mark. My. Words.

    1. Well 8% of them anyway!

    2. Sad Beard approves!

      Matt Yglesias
      ? ?@mattyglesias
      Laying down the marker?Obamacare implementation’s going to be great and people will love it: http://www.slate.com/blogs/mon…..great.html ?
      11:23 AM – 17 Jul 2013

      1. Fucking Fucking Fuck the Modern Keynesians in the ass with a fucking chainsaw.

        https://www.youtube.com/watch?v=bMehSfTmnbY

        1. The only Banks worth liking, are the ones worth robbing.

    3. I make up to $90 an hour working from my home. My story is that I quit working at Walmart to work online and with a little effort I easily bring in around $40h to $86h? Someone was good to me by sharing this link with me, so now i am hoping i could help someone else out there by sharing this link… Try it, you won’t regret it!……
      http://www.work-cash.com

      1. I bet you rob Banks.

    4. I make up to $90 an hour working from my home. My story is that I quit working at Walmart to work online and with a little effort I easily bring in around $40h to $86h? Someone was good to me by sharing this link with me, so now i am hoping i could help someone else out there by sharing this link… Try it, you won’t regret it!……
      http://www.work-cash.com

      1. Or make donkey porn.

  2. Damn corporations. What we need are price controls! That will solve everything!

    1. Nationalize the health care industry. Hell, why stop there. Nationalize everything. Long live socialism!

      1. All within the state, nothing outside the state, nothing against the state.

        Prog Paradise.

        1. Il Duce approves!

          1. Il Douchecare

      2. How about we nationalize the law industry? Doesn’t everyone deserve legal representation? All attorneys should work for the state.

        How do you think that suggestion would go over on the left?

  3. At minimum, they suggest that there’s a lot we still don’t know about the law and how it will develop over the years.

    “We have to pass the bill and let it develop over the years so that you can find out what is in it.”

  4. My fucking premiums have already fucking gone the fuck up. And my deductibles doubled for 2014 and went up significantly again in 2015. Not to mention that insurance is now denying a whole lot of stuff it used to cover. Fuck.

    1. You’re becoming more bitter with time and age. I like you even more.

      1. I was not angry since I came to France
        Until this instant. Take a trumpet, herald;
        Ride thou unto the horsemen on yon hill:
        If they will fight with us, bid them come down,
        Or void the field; they do offend our sight:
        If they’ll do neither, we will come to them,
        And make them skirr away, as swift as stones
        Enforced from the old Assyrian slings:
        Besides, we’ll cut the throats of those we have,
        And not a man of them that we shall take
        Shall taste our mercy. Go and tell them so.

        1. Fifteen years in France teaches a man to hate…

          Fifteen years of wearing perfume… fifteen years of saying pardon.

          1. Pernod, s’il vous pla?t? Non? Vas te faire encule, je suis am?ricain!

            1. Vous ?tes am?ricain? Je suis Charlie!

          2. But surely, the scenery…

            1. Provence

          3. Oui oui, Marie.

        2. +1 kill’t the boys and the luggage.

    2. My actual premiums have not gone up in two years. However, my deductible and my out-of-pocket maximums keep increasing, which means they’re effectively going up.

      1. The big premium jump was over 2013 and 2014, though I, like others, am anticipating a big jump in the next year or two.

        1. I am waiting for my company to basically tell us all we are on our own for healthcare cause it is too expensive for them to manage with all the incentives to drive companies to dump people on the exchanges. That’s coming sooner than later…

          1. Really, it would be better if employers weren’t involved, as people would fully appreciate the damage, having to write a check for the premiums.

            1. Prole- I agree with this. And I think we would be better served by all people moving to Health Savings Accounts. It would be tons more transparent to the people consuming the health care, and it would be easy to just deposit Welfare money in the accounts of the truly “needy” rather than all these price distorting risk pools, tax write-offs and other third-party payments that effectively hide the costs and benefits of our decisions from us.

            2. Hidden costs are… the point I believe.

            3. “it would be better if employers weren’t involved”

              True, but revolutionaries in Russia said it would be better if the Tsar was no longer in power.

              Taking employers out of health care likely won’t lead to free market solutions. It will leave a void to be filled

          2. I actually don’t think that’s going to happen. Instead, the exchanges are going to become de-facto high-risk pools and employers — who have generally healthier groups — will be able to get lower-priced insurance (and employers big enough to self-insure can ignore Obamacare coverage mandates and get even better deals). The result, ironically, may be to strengthen the ties between employment and insurance.

      2. Same here. I think my premiums have gone up maybe 10 or 15 bucks….but my deductible is skyrocketing. I think it more than doubled.

    3. You gotta get on the Medicaid dawg!

      1. It is well for the American government that I lack superpowers.

        1. No shit. Same here.

    4. Yes, but you paying “full price” allows someone the opportunity to get subsidized insurance so they can still not get care because doctors won’t accept their crap insurance and they still are unable to afford their $3,000 deductible.

      You see, it’s a win-win!!!

      1. Ahem. I already gave until I fucking bled at the office.

        1. From each according to his ability, to each according to his need.

          Keep bleeding.

          1. Sorry, I need what’s left.

            1. Sorry, I need what’s left

              “No you don’t,” said the man in the suit. “No you don’t,” agreed the man in the uniform.

              1. Looks like Pro L just got outvoted.

                1. A lot of us have been outvoted for a while, two wolves and a sheep

          2. There’s nowhere left to cut (to induce further bleeding).

  5. Those greedy insurance companies have doubled the cost of my health insurance over the last four years! This is obviously a failure of the free market! I demand that government do something!

    1. Honestly I don’t see why the Obama administration, or Mx. Clinton after 2016 won’t simply cap premium increases. It will be popular and probably get bipartisan support.

      After the GOP completely abandons overturning the ACA, they’ll then be on record as wanting to increase your insurance premiums, because that’s the only wing that will even fight what Mx. Clinton will propose.

      1. They can cap the premium increases and everyone will celebrate, but then the insurers will simply make up the difference through the “risk corridors” three R’s:

        These three R’s include: A reinsurance fund of about $25 billion (financed off a fee on commercial insurance plans) that compensate health plans that enroll a costlier pool of patients; “Risk corridors” that substantially limit insurance company losses by shifting these costs to taxpayers; and Risk adjustment that balances health plans that enroll a disproportionate share of costlier patients.

        Medicare Official: Obamacare “Bailout” Of Insurers To Be Financed By New Tax

      2. Honestly I don’t see why the Obama administration, or Mx. Clinton after 2016 won’t simply cap premium increases.

        1. Firgging squirrels!

          How does a 40% per year increase cap sound?

      3. Cap increases? They can’t…this is nothing more than the rate adjusting to the appropriate level to keep the ACA alive. They will keep going up too because you will have relatively healthy individuals say fuck it and drop out which will increase them even more on those that actually need the insurance. AKA death spiral. See New Jersey as an example.

        1. Just exactly how Christian do you have to be to join a Christian healthcare ministry:

          http://www.chministries.org/

          Or maybe somebody can start a new libertarian branch of the Amish…

    2. “Those greedy insurance companies have doubled the cost of my health insurance over the last four years! This is obviously a failure of the free market! I demand that government do something!”

      It’s probably because the healthcare industry is dangerously unregulated! I mean, these doctors and insurance companies hardly have any laws to abide by! It’s the WILD WEST out there!!!

      /prog

  6. My employer-sponsored plan went up 20% this year. Can’t wait to see what next year will bring.

    1. That’s easy to predict: Lower costs and even more savings!

      Healthcare Reformed, bitch.

    2. They will push you onto the exchanges as they stop offering coverage. That’s by design. Single payer will not happen as long as companies offer healthcare.

    3. Going up 20% = savings of $4,500 (prog math)

  7. The health insurers are swimming in record profits.

    And the Peanut Gallery kept predicting a DEATH SPIRAL! that has not materialized.

    I really hate to be right all the time.

    1. Don’t worry, scrote. There are plenty of ‘tards out there living really kick-ass lives. My first wife was ‘tarded. She’s a pilot now.

      1. WHERE IS YOUR TATTOO? HOW COME YOU AIN’T GOT NO TATTOO???

        1. You talk like a fag and your shit’s all retarded.

          1. You need to be sentenced to Rehabilitation dude!

    2. Then why are they proposing the “save the insurance companies” slush fund referenced above Weigelplug?

      1. Who is “they”?

        S&P said IF profits fall then insurers MIGHT lose money then risk corridors COULD be underfunded.

        None of those conditions are happening nor is there a shred of evidence they will.

        1. Smaller insurers are NOT “swimming in profits” you fucking idiot. And not only that, the Risk Corridors program is currently underfunded.

          The whole thing is giant scam to award larger insurers who played ball with Obama from the beginning so they could quash competition.

          S&P sees PPACA risk corridors program funding gap

          “Without adequate payments coming into the risk corridors, it is unclear to us how CMS can fund the program,” the S&P analysts write.

          A risk corridors program failure would be a nuisance for the big national carriers but could wipe out more than 50 percent of the recorded capital of some of the newer, smaller insurers, the analysts say.

        2. Silly Weigelplug…..come out once and awhile for a little air…..clear up some of your cognitive issues.

          Even if the Obama team tried to re-program slush funds that it surfaced inside the Department of Health and Human Services, a recent analysis by the Congressional Research Service makes clear that first, Congress would have to separately appropriate the funds in order for any money to be spent on the Obamacare plans. That was never likely to happen.

          Now we know where the “bailout” money is going to come from. It will be paid for by a new tax levied on the insurance companies.

          Mandy Cohen, the Acting Administrator of the Centers for Medicare and Medicare Service’s Center for Consumer Information and Insurance Oversight, delivered that message yesterday. Cohen was testifying before the House Subcommittee on Economic Growth, Job Creation and Regulatory Affairs.

          She said that if funding for the risk corridors can’t be financed off the money that gets clawed away from profitable insurers (therefore allowing the entire scheme to remain budget neutral) then CMS has the authority, if not the intention to impose additional “user fees” on all health insurers to cover the higher losses experienced by the Obamacare plans.

          See the entire video here ? the specific discussion on the user fees starts at 19:40 (and runs for about 8 minutes).

          Sounds like Obamacare is considering going a little Human Centipede on the insurance industry.

        3. BUUUUTTTPPPPLLLLUUUUUUUGGGG

        4. I heard Obumbles is a fanatical defender of the second amendment.

        5. Sulkowicz’s Buttplug!

          1. Who is “they”?

            1. HOW THE HELL IS THEY !!! ButtliKKKer !!!!

    3. BUUUTTTPPPPPLLLUUUUUUUUUUUUGG, that explains why you so assiduously avoid being right.

      1. I always wondered what happened to Doogies buddy Vinnie!

        http://www.politico.com/news/s…..39025.html

    4. They’re “swimming in record profits” because your liberal masters collaborated with them to create the Obamacare abomination. Those profits are being Hoovered directly out of the pockets of the middle class. As intended.

      “Party of the little guy” my ass.

      1. Regulatory Capture refined into National Corporatism….

    5. “The health insurers are swimming in record profits.”

      And I am sure we all remember Obama’s speeches promising record profits for insurance companies once Obamacare became law!

      Thank God we passed a massively incomprehensible statute, and effectively nationalized 16% of the American economy, so that insurance companies can enjoy record profits!

    6. And the Peanut Gallery kept predicting a DEATH SPIRAL! that has not materialized.

      Death spirals take time, as they consist of annual premium increases driving more and more healthy people out of the insurance pool because the cost doesn’t justify the benefit if you’re healthy.

      One of the early signs is, wait for it, premium increases.

      1. Look, if something hasn’t happened in three years ten it won’t happen ever. Why, just look at the housing market collapse: that took like a week, tops.

      2. You need to have more than a few years’ foresight to realize these things. Political hacks and their social media lackeys rarely see past the day’s headlines.

    7. “Palin’s Buttplug|5.5.15 @ 1:05PM|#

      The health insurers are swimming in record profits.

      And the Peanut Gallery kept predicting a DEATH SPIRAL! that has not materialized.

      I really hate to be right all the time.”

      How can this be ? I thought insurance company profits were capped at 20% under Obamacare ?

      I find you hilarious ButtPlug. Here you are crowing about some evil insurance KKKorporations swimming in profits.

      Aren’t you a phony ?

      How old were you when you father abandoned you ButtPlug ?

    8. And who, exactly, gave the insurance companies a cooked fucking goose on a silver platter?

      I hope you choke on that demcock one day.

    9. So health insurers are doing well? That health care, tho?

    10. “Assurant Inc., its parent company, said last week that it would sell or shut down Assurant Health after the business lost $63.7 million last year and stood to report an operating loss of $80 million to $90 million for the first quarter of this year.”

    11. The health insurers are swimming in record profits.

      Yes, Obamacare was crony capitalism pure. What’s your point?

      And the Peanut Gallery kept predicting a DEATH SPIRAL! that has not materialized.

      That was the hypothetical alternative if the US government didn’t shove more money in the hands of insurance companies and doctors.

    12. “The health insurers are swimming in record profits.”

      I think a citation is required to back up this claim.

      Is that record profit in dollars or in percentage? Is that across the spectrum of companies or just the larger ones?

      You made the claim, now prove you’re correct Homer.

  8. Government is just the cluster that we fuck together.

    1. No.

      Government is the cluster that fucks us.

      1. In progressive America, cluster fucks you.

  9. It’s somewhat sad. New York’s insurance market was so screwed up before Obumblecare that we’re not really seeing much of anything relative to what the rest of the country got. After my out of pocket costs jumped 150% in the early years, it’s been quiet.

    1. To many, New York is the USA, so essentially, Obamacare is a smashing success.

  10. And, as the Pittsburgh Tribune-Review notes, the Department of Health and Human Services is thinking about the program’s financing on a three-year basis rather than a year at a time.

    Here is where they tell you in advance that they intend to lie.

    They will hand out non-budget-neutral risk corridor payments for three years, and then say, “Oops, we thought we’d end up budget neutral in the end. But we didn’t. And NOBODY COULD HAVE ANTICIPATED this would happen. Such a sad story.”

    That is exactly what they intend to do.

    1. Until Gruber shows up on Youtube in two months saying they knew this would happen all along and were banking on the stupidity of Americans to let them get away with it.

  11. The link showing last year’s premium increases is misleading; that data is for ACA QUALIFIED plans. Premiums tripled for those of us on the non-ACA plans (which were allowed until this year).

  12. Time Insurance company is owned by my company and we just announced we are either selling or divesting the health insurance unit and won’t be participating in the ACA this year anyway. The health couldn’t make money so it goes bye bye.

  13. designed to cover a portion of insurer losses should spending go beyond expected level. (Insurers whose costs were lower than expected would help defray the cost of the program by paying into the system, in theory making the system more or less self-supporting.)

    Whoever conceived of this must have been beaten with the stupid stick for years.

    What is an insurance company going to do: charge less to attract customers and depend on the government to cover any losses, or charge more, thus losing customers and risking having to right a check to cover the losses of their own competitors.

    Actually, I take back the stupid stick comment. This is so far beyond economically illiterate that it can only be attributed to fully intentional effort to line the pockets of insurance companies.

    1. Ohhh, well do I remember the days immediately after this fuckery passed. All those tards cheering on how insurance companies had been ‘sent back to school’ and how they’d have to toe the line now that Daddy Government was involved. Ha. Ha ha.

    2. Inevitable?

      It seems as though regulatory capture was built into law itself, as LynchPin1477 points out.

      1. Actually, this was supposed to be a response to the comment immediately below. I have no idea how it ended up here.

        1. Exactly what we’d excpect to hear from the guy with a smoking comment in his hand…

    3. Not intended to line the pockets of insurance companies, intended to make Obamacare look good by hiding the true costs. The first year results of Obamacare look better if you ignore that the year before premiums were jacked up in anticipation of insuring the uninsurable and the year after premiums were jacked up as a result of insuring the uninsurable. All that matters is, Obamacare went into effect and, look, premiums stopped rising.
      .
      Suderman is being overly polite, I think, in pretending that he believes government didn’t anticipate this particular problem rather than pointing out that the shitweasels knew full well that when they told the insurance companies (with a nod and a wink) not to worry about setting their rates too low because Uncle Sam had a blank check with their name on it that the insurance companies understood the nod and the wink and the blank check.

  14. Why are insurers pushing for such big hikes? In part because rates are negotiations with regulators, and there’s a general expectation that increases will be moderated through the rate regulation process.

    …and this is where the derp hits the fan. Same shit is gonna happen with ISP charges, etc.

    Regulatory capture is inevitable.

    1. I know I’m looking forward to shittier internet and higher costs.

  15. Planned rate hikes of this magnitude were frowned upon by the administration prior to the ACA so I’m sure we will hear from Obama any second now.

  16. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.netjob80.com

  17. The real problem is: Government is involved.

    Has no one figured it out? The common thread in most Americans disasters is… government.

  18. The real problem is: Government is involved.

    Has no one figured it out? The common thread in most Americans disasters is… government.

  19. “At minimum, they suggest that there’s a lot we still don’t know about the law and how it will develop over the years.”

    Sounds similar to “we have to pass the bill so that you can find out what is in it”. Is Nancy Pelosi working for Reason?

  20. WHO THE HELL IS THEY !!! Indeed.

    If I get sick I will see you all at the Emergency Room. It’s cheaper for someone like me to pay the “PenalTax” , not buy Health Insurance under O-Care, show up at my local Emergency Room, receive care, and then stiff the Hospital.

    The Math does not lie.

    WHO THE HELL IS THEY ????

  21. No one could have possibly foreseen this happening?

  22. My spouse’s premium went up 30% and her plan is ACA compliant — and was purchased only after the ACA went in to effect (although because we don’t qualify for a subsidy, we didn’t have to deal with the federal website disaster). Prior to that, she was paying COBRA premiums after leaving her job to start a business. The COBRA premium was $900 a month. Her premium went down to $600 a month (platinum plan) when she got her ACA compliant policy. Ironically, it was the same insurance company. She worked for a small business before, and small group plans are often more expensive due to claims experience rating. (The company had 4 employees.)
    Prior to the ACA going in to effect, that same insurance company would have declined her application for individual coverage (minor cancer 9 years ago, no chemo or radiation required)

    Mine went up 15% and my plan is not ACA compliant (and I probably won’t be able to renew it after this year). I have a $10,000 deductible.

    Our health insurance system is still lousy as was the pre-ACA status quo.

  23. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.netjob80.com

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