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ACA Fail Fractal
Why ACA Premiums Might Spike Dramatically

Insurers have started to request premium increases for their ACA plans for 2016, and the numbers aren’t pretty. Some insurers in some states are requesting double-digit jumps, with the highest going all the way up to 51.6 percent. At Forbes, Robert Laszewski argues that insurers are requesting large rate increases is the same for Laszewski: because fewer people have signed up for coverage than would be needed “to create a sustainable risk pool” (h/t Tyler Cowen). He notes that the jumps have come a year earlier than he expected, as some insurers have gotten nervous about whether the administration really will help cover shortfalls, as parts of the ACA dictated. More:

State sign-ups have varied with Vermont signing up 75% of the exchange eligible and Iowa only signing up 20%––insurers typically want to see 75% sign-up. Will the third open enrollment next year turn things around? This year’s results were not encouraging with the states having the best first year enrollment stalling out in 2015––California, Washington, and New York.

If this pattern of one good year of state enrollment followed by a flat enrollment continues, it is hard to see how Obamacare can reach a sustainable enrollment level.

Contrary to those who think these requested increases are not that big of a deal, Laszewski argues that unless enrollment comes up drastically in some parts of the country these rates, or rates close to them, are likely to come into effect. Five years out, we still don’t know yet the final effects the ACA will have—or the costs it will impose on the country. But if these numbers are any indication, U.S. health care under the ACA will remain far more expensive than it should be. Read the whole thing.

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  • JR

    ACA premiums are schedules to spike because insuring an older sicker population that was without insurance costs money. That question is easy. The real question is who is going to pay for it? I can’t wait to see that debate, when it becomes clear to many supporters of ACA, like the unions, that the answer is going to be them, and not the mythical “rich”.

  • FriendlyGoat

    There really isn’t much to discuss here until we receive the Supreme Court’s opinion in King v. Burwell. The current rate filings may or may not have any meaning.

    • JR

      True. But the article itself states that all these rates are predicated on government’s interpretation prevailing. If SCOTUS rules for the plaintiffs, the rates proposed would have to be revised dramatically higher. But let’s wait for the decision. I for one am not afraid to admit that I have no clue which way it’s going to be decided.

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