President Barack Obama continues to be in denial about the effects of his signature policy achievement, the health care reform law known as Obamacare, on insurance prices.
“Last year there were a number of states where the insurance companies came in requesting significant spikes in premiums,” Obama told a crowd in Tennessee last month. “And there were lots of stories in the newspaper, just like there are this year, about, oh, premiums are skyrocketing and this is going to be terrible and all that. When all the dust settled and the commissioners who were empowered to review these rates forced insurance companies to justify what they were seeking, what you discovered was, is that the rates actually didn’t go up as much as people thought.”
And as for this year?
“My expectation is that they’ll come in significantly lower than what’s being requested,” Obama told a crowd in Tennessee last month,” Obama said.
Sadly, pretty much none of what president Obama said was close to being true. So while it’s true that commissioners can review insurer rate increases, those requests aren’t based on hopes and dreams, they are based on Obamacare enrollees being sicker, and thus more in need of health services, than previously assumed.
“Our enrollees generated 24 percent more claims than we thought they would when we set our 2014 rates,” Nathan T. Johns, the chief financial officer of Arches Health Plan told the New York Times.
Sadly, that’s not an isolated incident.
“There’s not a lot of mystery to it,” Roy Vaughn, vice president of Blue Cross’ Tennessee plan said. “We lost a significant amount of money in the marketplace, $141 million, because we were not very accurate in predicting the utilization of health care.”
And because those losses were based in reality, Obama’s assertion that “when the dust settled” the rates “didn’t go up as much” simply isn’t true. In fact, an analysis by Yegeniy Feyman, who compiled county-based data for all but seven of the United States’ 3,133 counties, found that the underlying cost of an individually-purchased health insurance plan rose by 41 percent in 2014 relative to 2013.
This year is not going to be any better.
In what must have come as bitter irony for those in attendance at Obama’s speech in Nashville, the insurance commissioner soon after approved a 36.3 percent rate increase for the state’s largest insurer. In fact, the commissioner said that the approved rates might not even be “sufficient” to cover the expected spike in medical claims as a result of Obamacare.
McPeak isn’t alone. The Wall Street Journal’s Louise Radnofsky reports that other insurance commissioners are being forced to raise rates in order to keep insurers financially viable. For instance, Kentucky Insurance Commissioner Sharon Clark approved a rate increase of 25.1 percent and could only respond with, “We’re lucky.” And Idaho commissioner Dean Cameron approved a 23 percent increase, which he said was disappointing but “not unreasonable.”
Some commissioners are even finding themselves in the odd situation of having to order insurance companies to raise their rates in order to close the gap between what an insurer has collected versus what they spent. Chris Jacobs, writing for the Wall Street Journal, gives an example.
“One insurer that proposed a rate decrease for next year, Kaiser Health Plan of the Northwest, was forced to raise premiums by 8.3 percent,” Jacobs writes. “A carrier that proposed a 9 percent increase ended up with a 34.8 percent hike in rates. The commissioner’s office forced these adjustments to ensure that carriers do not pay out more in claims than they generate in premiums.”
The bottom line is simple: After three straight years of huge Obamacare-related rate hikes, it’s time that the president level with Americans, stop hiding behind insurance commissioners, and explain why he’s making insurance less affordable.