Tuesday, September 29, 2015

Obamacare rate increases in 2015 and 2016 will sweep the GOP into the White House!


Obamacare premiums will cause a firestorm at the polls in 2016! Rate increases will cause so many Americans to drop their Obamacare coverage, and those that have yet to sign-up (There is already low penetration that is well well well lower than the 75% needed) will be priced out of the healthcare market. Many Americans are going to be much worse off than they were prior to Obama breaking the American Healthcare system! Was it perfect? Hell no! But….If the Federal Government would have just bought every uninsured American a solid plan instead of wasting all this money on the Obamacare infrastructure America would not have this huge mess! Just saying!


Forbes/Opinion

JUN 10, 2015 @ 12:57 PM

GUEST POST WRITTEN BY

Robert Laszewski



Mr. Laszewski is the president of Health Policy and Strategy Associates, LLC, a policy consulting firm based in Washington, D.C.



Why Are The 2016 Obamacare Rate Increases So Large?



You might recall that I have said we wouldn’t see the real Obamacare rates until the 2017 prices are published in mid-2016. By then health plans will finally have had a couple of years of credible claim data and two of the three “3 Rs” reinsurance provisions subsidizing the insurance companies will have gone away.

I have also made the argument that after two years the Obamacare enrollment of what it needs for us to be assured that we have a sustainable risk pool—enough healthy people signed up to pay the costs for the sick.



Instead of moderate rate increases for one more year, the big rate increases have begun. They are particularly large among the health insurers with the most enrollment—the carriers with the most data.



Texas Blue Cross stands out. The health plan commented in its federal government rate filings that it covered 730,833 Obamacare individuals in 2014 with premium of $2.1 billion and claims totaling $2.5 billion––for a medical loss ratio of 119%. The plan further commented that, after the “3Rs” reinsurance adjustments, they lost 17% to 20% of premium in 2014–that would be about $400 million. And, they are only asking for a 20% rate increase.

While we won’t see all of the rates in all of the states for a few months, some state regulators have begun to make the 2016 rate actions public:

• CareFirst Blue Cross of Maryland is asking for a 34% rate increase on its PPO plan and a 26.7% rate increase for its HMO. CareFirst has an 80% market share in the Obamacare exchange and only 30% of the eligible Maryland market has signed up on the exchange.



• In Oregon, where less than 35% of the eligible have signed up on the exchange, the biggest insurer with 52% of the market, Moda, has asked for a 25.6% increase. Lifewise, with a 19% market share, has asked for a 38.5% increase.

• Blue Cross Blue Shield of Tennessee, with a 165,000 members making up 70% of the Obamacare exchange is asking for a 36.3% increase. The second biggest player, Humana HUM +1.14%, is asking for a 15.8% increase. Less than 40% of the eligible exchange market signed up in Tennessee.

• Georgia is the second biggest Obamacare market for Humana, having enrolled 254,000 people out of a total market of 479,000, and Georgia “maybe. Its CEO has said about Georgia, “We can’t have one business being subsidized by another business.” Humana is asking for 2016 individual plan rate increases from 14.8% to 19.44%.

• In Iowa, with the lowest enrollment rates in the country, and where its biggest Obamacare insurer went broke last December, Wellmark Blue Cross, which only sells off the exchange, is asking for a 43% increase on its Obamacare compliant policies. Coventry, which has 47,000 Obamacare customers, is asking for an 18% increase for its on-exchange business.

• The Kansas insurance department has not made its rate increases public yet but has said that plans will increase by as much as 38%. Less than 40% of the eligible have so far enrolled.

• Pennsylvania is not encouraging with market leader Highmark asking for increases ranging from 13.5% to 39.65% and the Geisinger HMO asking for increases from 40.6% to 58.4%. Pennsylvania enrolled 50% of the potential exchange market in 2015.



But the rate increases so far are also a mixed bag:

• In Washington State, where only 30% of the market signed up, the biggest player, Primera Blue Cross is asking for a 9.6% increase. But most of the other big plans are withdrawing their old plans and replacing them with new designs: Coordinated Care with 13% share, Lifewise 17% share, and Regence 16% share. When a carrier retools its offerings it is generally a sign of needing to go back to the drawing board. Requested rate changes for other existing plans range from -10.86% to +19.3%.

• In Connecticut, where 45% of the market signed up, the biggest insurer on the exchange, Anthem WLP +% with a 33% share, has asked for a 6.7% increase and the second biggest carrier, Connecticare, has asked for a 2% increase for its on exchange plans. Other increases range from +5.2% to +33%.

• In Michigan, where 45% of the market signed up, the biggest Blue plan with 65% market share is asking for a 9.7% increase on one of its plans and an 11.3% increase on the other. Other increases range from -12.6% to +42.2%.

• In Vermont, the state with the highest market penetration for the Obamacare exchange with 75% signing up, the dominant Blues plan is asking for increases averaging 8.3% and ranging from +4.7% to +14.3%.

There will be lots more big rate increases coming. For two months we’ve been hearing warnings out in the market that this is going to be widespread. It is also important to note that none of these insurers knew what increases their competitors were going to submit when they prepared their rate actions. What would some of these smaller players have done if they had known in advance the big players with the most data and experience were giving such large increases?

Some might argue these increases are not such a big deal because those being subsidized by the government have their out-of-pocket premiums capped as a percentage of their incomes no matter what the insurance costs. That these people apparently think this bigger price will be paid by the health insurance subsidy fairy aside, it will be important to remember that deductibles and co-pays also rise in relation to costs. When the new plans become public expect to see bigger deductibles and co-pays as well for 2016. The average individual baseline Silver Plan deductible was almost $3,000 last year.

Like last year, others will argue that these rate increases still have to be approved in some of the states. But unlike last year, the carriers now have hard data to show the insurance regulators. Some states will bring political pressure to bear on these increases. But a 35% increase is not suddenly going to become a 5% increase. There is obviously an overall claim cost problem here and regulation can sometimes push it off but it can’t make it go away.

Others will point out that people only have to switch plans to keep their costs in line since there are some carriers asking for a lot less. That’s right. But the fact that it is the big market share players that are often asking for the big increases says something important about where these cheaper plans will be next year. The big guys know something.

You just can’t look at this data and come away with a conclusion other than the big cost increases driven by too few people signing up has started. And it has started a year earlier than most of us expected.

Why are rates all over the place? There are a number of reasons.

The number of people signing up for Obamacare has varied considerably by state and is far below the level of penetration the industry typically needs to create a sustainable risk pool



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.

Many, but not all, carriers are worried that the Obama administration is not going to follow through on its promises to pay off most of a carrier’s losses through the “3Rs” reinsurance program and decided not to wait another year before hiking the rates

In December’s budget deal, the Congress insisted that the third element of the program—the risk corridors—be revenue neutral after the administration last year promised it would not be capped. S&P recently reported that, “The ACA risk corridor will not receive adequate monies from insurers with profitable exchange business to pay insurers that have unprofitable exchange business.”

And in 2016, the second element of the “3Rs,” the claim reinsurance element, will see the point over which the government helps pay the claim rise from a $45,000 claim to a $90,000 claim.

Then there is the permanent and revenue neutral risk adjustor element of the program. Health insurers with the worst claims experience end up getting subsidized by the ones with the best experience. The problem is that the government won’t do this calculation on the last year’s business until after the health plans have to submit the next year’s rates making next year’s rate calculation dicey at best.

This is not an exact science

Over the years, it has been common to see one insurance company in the same market dramatically price its business differently than another. Some have more data, some are more patient, some are willing to underprice to grab more market share, some have more experience in this market niche, and some just screw it up. Over time, a few years, they all eventually get to about the same place but with lots of variation along the way.

Health plans are still dealing with incomplete data. Really, they are looking at just one year of claims experience (early 2014 to early 2015) for a brand new book of business in which the enrollment has not been stable.

What has concerned many actuaries is how the market penetration for Obamacare slowed considerably in year two in the states with the best first year enrollment results. And, almost all of the states recorded a second year growth rate of 10% to 20%. A 20% growth rate might sound good, but to hit the original Obamacare enrollment targets in this first three-year ramp-up, we needed to see enrollment almost double. Obamacare enrollment just plain looks to be stalling out just about everywhere below satisfactory levels and that is a very bad omen for insurer bottom line results.

These rates assume the King v. Burwell Supreme Court challenge to the premium subsidies in the states using the federally run exchange will be unsuccessful

If the Court eliminates the subsidies in at least 34 states, the health plans will submit new and much higher rates in those states.