Many health insurance companies across the country have requested large hikes in the premiums they will charge for their plans in 2016, arguing that they need to raises prices to cover the new costs they have incurred under the ACA (read: paying for the care of sicker Americans). In one case, an insurer is looking for a 51.6 percent increase, and even though that’s an outlier, other insurers are asking for rates that are high enough to cause concern. State regulators have the power to deny or reduce the increases, and, as the NYT reports, Administration officials are very much hoping they will, offering a slew of reasons why insurers don’t need the hikes to stay solvent.
According to the Times, Federal health care chief Kevin Counihan has written a letter to state regulators arguing, among other things, that the 2016 will see a healthier pool as higher penalties for non-compliance with the individual mandate go into effect and push healthier Americans into the arms of insurers. Not everyone is convinced, however. Insurers themselves claim, of course, that they need the increases, but they’re not the only ones who seem to be sounding a skeptical note:
But Scott Keefer, a vice president of Blue Cross and Blue Shield of Minnesota, which requested rate increases averaging about 50 percent for 2016, said his company had not seen an improvement in the health status of new customers.
“Our claims experience has not slowed at all,” Mr. Keefer said. “The trend has gotten a little worse than we expected.” […]
State officials said their agencies had been reviewing insurance rates for decades and generally knew local market conditions better than federal officials.
Monica J. Lindeen, a Democrat who is the Montana insurance commissioner and the president of the National Association of Insurance Commissioners, said the letter from Mr. Counihan was interesting, but “did not point to any new information that would impact how state insurance departments regulate their health insurance markets.”
So will rates skyrocket? That’s the big question observers of President Obama’s controversial health care law will be asking. The answer that emerges from the NYT piece is that we don’t really know yet. In at least one case, in Oregon, not only did the state Insurance Commissioner approve double-digit increases, she even required insurers that didn’t request increases to raise their prices. On the other hand, the NYT reports that Administration officials are confident rates will overall come in lower than requested when all’s said and done.
But framing the question that way distorts the broader picture. It’s to the Administration’s political benefit, of course, that the requests have been so high, since, if the actual increases are at least lower than those requested, it can claim a victory of sorts. We’ve seen that kind of dance before. But the big picture of U.S. health care is that it is too expensive and only getting more so. If premiums truly do skyrocket, that will be a political disaster for the Administration. If they increase only modestly, the Administration will make PR hay out of it. But in either case, the U.S. health care system will remain broken—and our parties remain without clear ideas about how to fix it.