Obamacare is Pushing Insurance Premiums Sky High

It’s been a bad two weeks for Obamacare. It’s been a worse two weeks for those shopping for health insurance in the Obamacare exchanges. Just take a look at some of the latest headlines and news from around the states:

  • Problems for Obamacare: Largest Texas insurer asks for big price hike. And we’re not talking a small hike either. Blue Cross Blue Shield of Texas, which has about 603,000 individual policyholders, said it is seeking increases averaging from 57.3 to 59.4 percent across its plans based on losses of $416 million in 2014 and $592 million last year.
  • Obamacare Rates Rise in New York, and So Does Political Risk: New York’s health insurers are seeking to raise the amount that customers pay for Obamacare  plans by an average of 17.3 percent, and UnitedHealth—the nation’s largest insurer—is seeking to boost premiums by whopping 45.6 percent. Insurers say that regulators have the ability to review requests, but warn that if they’re not approved carriers will leave the market.
  • Some rates in Georgia insurance exchange could soar in 2017: Blue Cross and Blue Shield of Georgia is seeking relatively modest increases ranging from 9.1. percent to 14.8 percent, but Humana has decided to limit its plans to major metropolitan areas and pose an average increase of 65.2 percent.
  • Indiana health insurance costs to climb in 2016: Anthem, the nation’s second-largest insurer, is proposing premium hikes ranging from 20 percent to 41 percent in its home state.
  • Coventry plans 23% health-insurance premium increase: Iowans are facing steep hikes from two of their largest plans. Coventry is asking for premium increases averaging 23 percent and Wellmark intends to raise premiums 38 percent to 43 percent on its individual poliycholders.
  • Highmark, UPMC propose higher Obamacare rates: Highmark, which is Pennsylvania’s largest insurer, asked for increases averaging 48 percent, in part because they lost $773 million on the plans in 2014 and 2015 after sicker-than-expected members flooded the rolls.
  • Insurers in Delaware exchange seek steep rate increases: Highmark Blue Cross Blue Shield of Delaware is asking for an average rate increase of 32.5 percent for their individual plans, and Aetna is asking regulators for a 25 percent rate increase.
  • UnitedHealth to Exist California’s Obamacare Market: Last month, the nation’s largest health insurer announced that it was dropping out of all but a handful of markets. This month, they’ve made clear that they are pulling their coverage out of California, the nation’s largest exchange.
  • NC health insurers propose ACA rate increases for 2017: The state’s two largest insurers—Blue Cross Blue Shield of North Carolina and Aetna—announced that they were looking to increase premiums by 18.8 percent and 24.5 percent respectively. Blue Cross’ chief actuary said that they were still undercharging for insurance and would still need to make a decision about whether to cut back its offerings.
  • Maine insurers request double-digit increases for government health plans: Maine Community Health Options, which went so far as to attempt to stop enrolling Obamacare individuals mid-year in a desperate attempt to stem losses, is requesting a 22.8 percent increase. Among other insurers, HarvardPilgrim is requesting 18.7 percent and Aetna is seeking 14.2 percent.
  • Virginia health insurers seek double-digit premium increases: Rate requests from the five largest Virginia insurers show average increases ranging from 9.4 percent to 37.1 percent for individual coverage, the result of rising hospital treatment costs and people using medical services more often than expected.

These rates may come down slightly after negotiations with state regulators, but given the tremendous losses suffered by insurers in recent years, there is no doubt that rates will be rising dramatically across the United States. This is a huge problem for consumers who will have to shell out hundreds, even thousands more dollars in order to get the same, or even less comprehensive product than they did last year. But it’s also a huge problem for Democrats. Paul Demko reports for Politico:

The last thing Democrats want to contend with just a week before the 2016 presidential election is an outcry over double-digit insurance hikes as millions of Americans begin signing up for Obamacare.

But that looks increasingly likely as health plans socked by Obamacare losses look to regain their financial footing by raising rates.

One big reason is lower-than-expected enrollment of younger, often healthier people who balance the costs of those who require more costly care. Roughly 12.7 million Americans signed up for Obamacare plans during the most recent open enrollment period. That’s far below the 22 million projected by the Congressional Budget Office, and it’s certain to decline as some drop out.

“The pool is far less healthy than we forecast,” said Brad Wilson, CEO of Blue Cross Blue Shield of North Carolina, which says it lost $400 million on its exchange business during the first two years and is weighing whether to compete for Obamacare customers in 2017. “That’s an issue not just here in North Carolina, but all over. … We need more healthy people in the pool.”

And that’s the existential crisis for Obamacare. Young adults feel like Obamacare is already too expensive and have opted to not purchase insurance. That in turn, is further increasing prices by leaving insurers with a older and sicker population than expected, which makes the economic choice even clearer for young adults. Unless Democrats figure out how to solve that problem, Obamacare could push the market into a death spiral of ever-rising rates.