As soon as insurers like BlueCross BlueShield of Tennessee began announcing last week that they will seek premium rate increases next year by an average of more than 36 percent, a new buzz began in some circles to blame Obamacare — more properly known as the Affordable Care Act.
BlueCross BlueShield itself even blamed the ACA: “It was a new market, and as we filed our initial rates for 2014 we had no data on the population that we would cover. We did not foresee the kind of medical costs that we’ve experienced with this group of members,” said BlueCross Vice President Roy Vaughn.
But not so fast.
It is to be expected, of course, that insurance premiums — all insurance premiums — will be higher in 2016 than in 2015. There are very few among us — other than a good many of people who traded commercial policies for healthcare.gov plans when the ACA’s marketplace first opened — who have ever seen a year when premiums didn’t increase.
Health care costs, the largest determinant of premiums, are on the rise overall, and have been rising astronomically in the past decade.
And while the ACA marketplace premiums that got the headlines were the ones going up — some by double digits — some went down, as well.
Finally, these are just requests. Under the ACA, the federal government set up a system in which it will scrutinize any rate increase of more than 10 percent. Last year, regulators forced down many big rate requests, so some of the increases that loom large now may shrink.
But what no one seems to be looking at yet is how much next year’s proposed increases — an average of 36 percent is sought by BlueCross in Tennessee — is also driven by the fact that Republicans in half of our states did everything in their power to sabotage the ACA and, like Tennessee, refused to participate.
Why does that matter? Volume.
To keep premiums down, it’s critical to get more people signed up, since new ACA marketplace enrollees will tend to be healthier, according to the Henry J. Kaiser Family Foundation, a major health care policy research group. The more healthier people in a plan, the greater the likelihood of keeping premiums lower.
Take Tennessee as an example. By not expanding Medicaid, Tennessee left 280,000 working, but poor, residents without access to insurance that they could afford. (Remember, nonworking poor adults and children in poverty generally are already in Tennessee’s TennCare program.) The working poor are reasonably healthy — otherwise they wouldn’t be working. But they are the ones not in the BlueCross group to levelize costs.
Insurers are basing their 2016 premium proposals on real claims experience from a first-year snapshot. But if state regulators approve the BlueCross proposed rate hikes this year, average individual rates will rise to more than 60 percent above the 2014 levels. BlueCross isn’t alone. Tennessee’s health insurance co-op plan, the Knoxville-based Community Health Alliance, is seeking a nearly 33 percent rate increase, while Humana is asking for a 16 percent increase.
Forgotten in the rush to shriek are the positive aspects of the ACA that may actually be more threatened by the pending Supreme Court decision at the end of this month than by guesstimated premium rates.
Under Obamacare, insurers may no longer deny coverage or charge people more if they have pre-existing medical conditions. In the first couple of years of the health exchange plans, BlueCross said 3 percent of its individual plan members accounted for 50 percent of its medical costs — a far bigger share than expected and evidence of just how many people were denied insurance simply because they were sick.
Nationally, 10.2 million signed up this year for private, commercial health insurance this year — and paid their first month’s premium.
But Republicans, even Tennessee’s Sen. Lamar Alexander, are piling on — desperate to see failure.
“The unfortunate reality is, principally because of Obamacare, tens of thousands of Tennesseans who buy individual Obamacare policies could see their health care premiums go up next year by double digits — and by more than 36 percent if they’re enrolled in the state’s most popular plan. This is money that will come straight out of many of these Tennesseans’ pocketbooks. Republicans are ready to reduce Tennesseans’ costs with plans to restore freedom and competition to the insurance marketplace and allow individuals to choose the health care plan that meets their needs and their budget.”
Like that “competition” really worked for us before? Hardly.
The real question is what will the Supreme Court, expected to rule soon on the validity of subsidies in states that don’t operate their own marketplace exchanges (like Tennessee) do?
In Tennessee, Georgia and Alabama; 155,753, 412,385, and 132,253 people, respectively, are at risk of losing tax credits (and therefore likely losing their insurance) if the Supreme Court says the subsidies should be unavailable to states that spurned the Obamacare. The total monthly tax credits dollars at risk for all enrollees in all three states is $182.5 million, according to Kaiser.
It’s too soon to reject the ACA simply because the dynamics of health care finance and insurance — which we’ve seen play out in the commercial market for years — are raising eyebrows.