Higher! Higher! is the title of one of our children’s favorite books. But it’s not the phrase that we wish sprung to mind when we thought about health insurance rates for the year ahead. Alas, based on the Obama Administration’s posting this week of the proposed rates for hundreds of plans across the country for which insurers are seeking premium increases of at least 10%, it was all that we could think of! In some states, particularly where one carrier dominates the market, we noted many rate increase proposals of upwards of 25%. That’s hardly evidence of President Obama’s famous 2008 promise to lower the average American’s health insurance premium by $2,500! Carriers by and large blame the high rate increase proposals on PPACA administrative expenses, better risk pool data and the high cost of medical care, particularly certain pharmaceuticals.
Health plans had to file their proposed rates with the state insurance department in April and then the state review process commenced and is still well underway. However, the PPACA also requires federal review of any rate increase proposed that exceeds 10%, which is where this week’s list came from. Furthermore, if a carrier does ultimately adopt such a high rate increase when rates are finalized in the fall then the rate increase is publicly disclosed and if a carrier issues too many double-digit increases, the end result could be a ban from exchange-based product sales by the Department of Health and Human Services (HHS). This week’s release of data is merely a list of all of the carriers that initially asked for large increases. HHS Secretary Sylvia Matthews Burwell was quick to point out, that last year in many states the summer-long rate review process wound up decreasing final premiums. “We have seen the process put downward pressure,” she said. Speaking about the data release at a Wall Street Journal Forum earlier this week she noted that one goal of the PPACA was to create greater transparency in the healthcare system, and that “these are the preliminary rates that will be reviewed.” But they will be reviewed in the light of the King decision, and if the subsidies are struck and the individual market risk-pool blows up, 25% increases may seem like nothing special!