WASHINGTON – For several years, the Obama administration has urged state insurance regulators to use tools provided by the Affordable Care Act to hold down health care premiums.
Now federal officials will have a chance to practice what they preach as they confront big increases proposed in several states where they are responsible for reviewing rates.
Federal officials defer to the insurance commissioners in 46 states deemed to have “effective rate review” programs. But in Missouri, Oklahoma, Texas and Wyoming, the federal government is in charge of reviewing rates.
And those reviews create an exquisite political challenge, spotlighting a pocketbook issue that affects millions of voters.
Large requests
In Texas, Blue Cross and Blue Shield is requesting rate increases of nearly 60 percent for 2017. In Oklahoma, Blue Cross and Blue Shield has proposed increases that average 49 percent. And in Missouri, Humana has filed for a 34 percent increase. All three carriers say they have lost money on many policies sold to individuals and families under the Affordable Care Act.
Such large requests are not typical and will test the rate review process, described by the Obama administration as one of the most important consumer protections in the Affordable Care Act.
Federal officials have urged states to be aggressive in reviewing rates, but it is not clear how aggressive federal officials will be. Michael Rhoads, deputy commissioner of the Oklahoma Insurance Department, said he doubted that federal officials would significantly pare back rates requested in his state, given that insurers had lost money on their exchange business and several had left the Oklahoma marketplace.
The political calendar puts pressure on the administration to rein in rates. The next open enrollment period starts Nov. 1, and insurers will be notifying consumers of rate increases in the weeks before Election Day, Nov. 8.
Donald Trump, the presumptive Republican presidential nominee, regularly cites high premiums as evidence of the law’s failure. “The numbers are astronomical,” he said at a rally this month.
But administration officials say the “sticker price” does not matter for consumers because most people in the public insurance exchanges receive subsidies to help pay premiums, and they also can shop for less expensive insurance.
Among people receiving subsidies, the average beneficiary’s share of the premium rose by just $ 4 a month, to $ 106 a month in 2016, said Kevin Counihan, chief executive of the federal insurance marketplace.
Picking up the tab
Gregory Thompson, a spokesman for Blue Cross and Blue Shield plans in five states, including Oklahoma and Texas, said the reason for the big rate requests was simple. “It’s underlying medical costs,” he said. “That’s what makes up the insurance premium.”
For every dollar in premiums collected last year, Blue Cross and Blue Shield plans say they paid out $ 1.26 on claims in Texas and $ 1.38 in Oklahoma. This, they say, is not sustainable.
The Obama administration has repeatedly said proposed rate increases are less worrisome than they appear because they are often reduced in the review process. Those reviews, coupled with larger subsidies in the form of tax credits, mean “individuals are not seeing the increases,” said Jason Furman, chairman of the White House Council of Economic Advisers.
The law’s opponents are unconvinced.
“The subsidy doesn’t change the actual cost,” said Rep. Mike Kelly, R-Pa. “At the end of the day, somebody still has to pick up the tab, and that’s the taxpayer.”
Many people buying insurance on their own do not receive subsidies.
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