US insurers have asked for double-digit increases for about third of the health insurance plans listed on the national healthcare exchange, a report has found.
The AgileHeathInsurance.com report found that 7% of plans sold on the exchange have proposed a rate increase of at least 30%, and 14% of the plans have proposed a rate increase of at least 20%.
Under the Affordable Care Act (ACA), commonly referred to as Obamacare, the new rates would go into effect come November, at the beginning of the open enrolment period for 2016.
At a July town hall in Tennessee, Barack Obama said that he expected the rates to “come in significantly lower than what’s being requested”.
Yet a month later, a proposed 36% rate hike by BlueCross was approved.
Tennessee’s insurance commissioner Julie Mix McPeak said that the increase for 2016 was necessary to cover the increase in costs related to claims from sick people who signed up for health insurance plans during the first two years of the ACA’s operation.
“Politics, and any opposition to the ACA, doesn’t have anything to do with [the increase],” McPeak told the Wall Street Journal. “Do I wish they were lower? Absolutely, because I know what it means to consumers.”
Since almost nine in 10 Americans shopping for health insurance plans on the ACA exchange receive financial assistance, most of them would not actually see a particularly drastic price increase.
When proposing new rates for 2016, insurers have to justify why they are seeking price increases. It is then up to the state insurance regulators to determine if the rate increases are justified or not.
Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, which oversees the ACA, told CNBC that the law increases competition for consumers, since they can shop around for the best deals.
“Last year, more than half of re-enrolling customers on HealthCare.gov actively shopped and selected a new plan, something that wasn’t possible for many consumers prior to the ACA due to the risk of being charged a higher premium or denied coverage entirely due to a pre-existing condition,” Albright explained.
“Consumers will find a range of quality, affordable coverage options on the marketplace in 2016.”
The thinking goes that in order to stay competitive, health insurance plans will keep their rate hikes low.
Instead of hoping that competition will keep the rates down, Wisconsin Democrats have introduced a bill designed to do so. Currently, there are six health insurance companies are seeking rate increases between 10% and 33% on the Wisconsin-listed plans. It is unlikely that the bill will pass through the state legislature, which is currently controlled by a Republican majority.
So far, some of the highest reported approved rate hikes have been the 36% rate hike for BlueCross BlueShield in Tennessee, a 26% rate hike for CareFirst insurance plans in Maryland and 25% rate hikes for Kentucky HealthCooperative plans in Kentucky and Moda Health plans in Oregon.
