Insurance industry predicts skyrocketing Obamacare premiums next year
According to the Hill, many insurance companies are contradicting HHS Secretary Sebelius's rosy predictions about modest increases in Obamacare premiums next year.
Some of the increases will be "significant." How significant? In some states, the increase may be as much as 300%.
The expected rate hikes will be announced in the coming months amid an intense election year, when control of the Senate is up for grabs. The sticker shock would likely bolster the GOP’s prospects in November and hamper ObamaCare insurance enrollment efforts in 2015.
The industry complaints come less than a week after Health and Human Services (HHS) Secretary Kathleen Sebelius sought to downplay concerns about rising premiums in the healthcare sector. She told lawmakers rates would increase in 2015 but grow more slowly than in the past.
“The increases are far less significant than what they were prior to the Affordable Care Act,” the secretary said in testimony before the House Ways and Means Committee.
Her comment baffled insurance officials, who said it runs counter to the industry’s consensus about next year.
“It’s pretty shortsighted because I think everybody knows that the way the exchange has rolled out … is going to lead to higher costs,” said one senior insurance executive who requested anonymity.
The insurance official, who hails from a populous swing state, said his company expects to triple its rates next year on the ObamaCare exchange.
The hikes are expected to vary substantially by region, state and carrier.
Areas of the country with older, sicker or smaller populations are likely to be hit hardest, while others might not see substantial increases at all.
Several major companies have been bullish on the healthcare law as a growth opportunity. With investors, especially, the firms downplay the consequences of more older, sicker enrollees in the risk pool.
Much will depend on how firms are coping with the healthcare law’s raft of new fees and regulatory restrictions, according to another industry official.
Some insurers initially underpriced their policies to begin with, expecting to raise rates in the second year.
Others, especially in larger states, will continue to hold rates low in order to remain competitive.
But insurance officials are quick to emphasize that any spikes would be a consequence of delays and changes in ObamaCare’s rollout.
They point out that the administration, after a massive public outcry, eased their policies to allow people to keep their old health plans. That kept some healthy people in place, instead of making them jump into the new exchanges.
Note that part of these massive increases is due to President Obama's desperate attempts to deal with consumer backlash about his failed promises as well as his desire to push back some Obamacare mandates beyond election day next year.
Apparently, insurance companies aren't going to let him get away with it.
The spin by Democrats will be that not all consumers will see big increases, and besides, insurance premiums go up all the time:
David Cutler, who has been called an architect of Obama-Care, said, “Health premiums increase every year, so the odds are very good that they will increase next year as well. None of that is news. The question is whether it will be a lot or a little. That depends in part on how big the insurers think the exchanges will be.”
Jon Gruber, who also helped design the Affordable Care Act, said, “The bottom line is that we just don’t know. Premiums were rising 7 to 10 percent a year before the law. So the question is whether we will see a continuation of that sort of single digit increase, as Sebelius said, or whether it will be larger.
The problem for the Democrats is that Obamacare has left the realm of the theoretical and entered the real world. As long as Obamacare's problems were predictions, Democrats could claim that Republicans were bad mouthing the law in order to kill it.
Now, the American people don't need Republican spin to see the damage this law is going to inflict on them. They are experiencing it first hand and if the GOP is smart, it will develop ads and social media campaigns to buttress what people already know and are seeing in their own lives. No need for overkill. The truth is devastating enough.
Hat Tip: Ed Lasky