An Obamacare Price Hike?

Mar 20 2014 @ 1:17pm
by Patrick Appel

Elise Viebeck warns of one:

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

Cohn throws cold water:

As usual, the real news here is more complicated and ambiguous.

The possibility of higher-than-normal rate increases in some parts of the country is real enough, for several reasons. Chief among them: Insurance companies may have expected a better mix of beneficiaries—in other words, more healthy people and fewer sicker ones. If so, the companies could discover that the premiums they set for this year are too low to cover the medical bills they must pay to doctors, hospitals, pharmacies, and the like. If that happens, the insurers could respond by raising premiums next year, perhaps substantially. Serious, honest people are worried about this scenario unfolding, based in part on rumblings they are picking up from within the insurance industry. “There is extensive concern about rate increases next year,” Caroline Pearson, vice president of Avalere Health, told the Fiscal Times. “Particularly since exchange enrollment is skewed toward older enrollees, some are concerned that plans will need to raise prices in 2015.”

But as Pearson also pointed out—and as all the “could”s and “if”s in the above paragraph imply—nobody really knows what’s going to happen.

Mcardle is somewhat skeptical of Viebeck’s report:

Insurance executives have every incentive to be as alarmist as possible. The administration and the insurers are now engaged in a lengthy negotiation about what you might call “The Obamacare Exchange Rescue Package of 2014.” In response to public outcry, the administration has made a bunch of changes to the rules — allowing people with “grandfathered” plans, for instance, to keep their policies. Those rule changes are going to cost the insurers a considerable sum. So the administration is proposing more rule changes, this time to funnel money to the insurers.

The insurance industry would like the funnel to be as big as possible. One way to encourage this is to tell reporters that you’re planning to triple policy premiums in “a populous swing state” — during an election year.