Premiums are going to go up; there’s almost no doubt about that. But the Obama administration is putting pressure on state insurance commissioners to keep the rate hikes on their Affordable Care Act (ACA) marketplace plans as small as possible.
On Wednesday the U.s. Department of Health and Human Services announced it would be distributing $22 million to state officials to bolster their reviews of premium rates proposed by insurers. The administration hopes that cash-strapped insurance commissioners can use the money to hire more employees or contract with experts to scrutinize premium plans submitted by insurers.
A recent study by the Kaiser Family Foundation estimated that premiums for the average ACA marketplace plan will rise 11 percent next year. In some markets, however, the increases will likely be much greater.
This isn’t the first time the administration has urged state insurance commissioners to flex their regulatory muscle to keep premiums down. Last year, in the wake of big hikes proposed by a number of major insurance plans in some states, the White House told state officials to regard the proposals with skepticism, and to demand that insurers justify the hikes with strong evidence of high costs from claims.
The problem is, even if the administration contends that some of the proposed premium increases are “unreasonable,” there is a risk that insurers that feel bullied will respond by pulling out of the ACA marketplace entirely, as UnitedHealthcare has done in most states. Other large insurers have indicated recently that they might be forced to leave the marketplace if profits don’t get better.
Indeed, a spokeswoman for the trade organization America’s Health Insurance Plans told The Hill that she hoped the rate review process wasn’t becoming a “political football.”
If premiums go too high, many Obamacare customers, particularly young, healthy ones, might drop their plans, threatening the solvency of the system.
But there is also an immediate political risk that big premiums pose to the president’s party. Customers will be notified of the new rates just a few days before Election Day, something that could be awkward for Hillary Clinton, who is running as a strong defender of the ACA.
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