Health Insurers Gaining Approval for Significant Premium Increases
U.S. health insurers are seeking and receiving approval for "double-digit increases" in premiums for small businesses and individuals who do not have employer-provided coverage, despite provisions in the Affordable Care Act intended to stem coverage costs, the New York Times reports.
About the Trend
Under the ACA, regulators are required to review any request for a rate increase of 10% or more, but only 37 states currently give legislators the authority to deny or reduce rates that state officials deem excessive. The remaining states can question the basis for increased rates, which sometimes results in the insurer reducing or modifying its rate request.
In 2010, an attempt in California to significantly increase premiums -- Anthem Blue Cross' 2010 request to raise rates by 39% -- provided supporters of a federal health reform law with an example of why such legislation was necessary.
However, three companies in California -- one of the states that lacks the authority to deny or reduce excessive premium increases -- currently are seeking similar premium increases:
- Aetna proposed a 22% increase;
- Anthem Blue Cross proposed a 26% increase; and
- Blue Shield of California proposed a 20% increase.
Meanwhile, insurers in Florida and Ohio already have increased rates for certain customers by more than 20%.
The increases come amid reports indicating that health care costs have slowed in recent years and an estimate from PricewaterhouseCoopers that costs will increase by just 7.5% next year.
Comments on Trend
The health insurance industry defended the necessity of significant premium increases. Tom Epstein, a spokesperson for Blue Shield of California, said, "We need these rates to even come reasonably close to covering the expenses of this population." Insurers contend that rates for certain policyholders are increasing at a much higher rate than average.
Meanwhile, some observers have said the ACA provisions lack the teeth necessary to hold down premiums.
California Insurance Commissioner Dave Jones (D) said that insurance companies will be able to increase rates as much as they did before the ACA unless all regulators are given authority to refuse or reduce rate increases. "It's a huge loophole in the [ACA]," he said.
However, federal officials announced in September that the rate review process reduced insurance rates by three percentage points. In addition, CMS spokesperson Brian Cook noted that the medical-loss ratio provision in the ACA has resulted in insurers refunding customers $1.1 billion (Abelson, New York Times, 1/5).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.