Insurance companies and the federal government are finding themselves at loggerheads once again.
Citing sicker-than-expected customers who purchased policies under the Affordable Care Act, the nation’s health insurers are seeking rate increases of 20 percent to 40 percent or more for the 2016 open enrollment season. Federal officials, meanwhile, have vowed to scale back such requests.
According to a New York Times report, market leading Blue Cross and Blue Shield plans are especially insistent on raising prices. Various insurers are looking for rate increases of an average 23% in Illinois, 25% in North Carolina, 31% in Oklahoma, 36% in Tennessee and 54% in Minnesota.
Elsewhere, insurers participating in the federal exchange have filed requests for pricing hikes that reach as high as 85% in Georgia and as low as 30% in Maryland.
The root cause of the problem is the failure of several marketplaces to attract enough young, healthy applicants.
“As a result, millions of people will face Obamacare sticker shock,” said Wyoming Senator John Barrasso.
Insurance companies who want to raise rates more than 10% are required to submit their pricing plans for approval through the states’ insurance department with an explanation as to the high increases. Federal officials, however, have already pushed back at the proposed increases.
During a stop in Tennessee late last week, President Barack Obama told consumers to contact state insurance regulators and urge them to carefully review such high pricing proposals.
If commissioners “do their job” and actively review rates, he said, “my expectations is that they’ll come in significantly lower than what’s being requested.”
The comments are part of a more general increase in government review of health insurers. Earlier this month, a senior Justice Department official told reporters that antitrust enforcers want more power to review pending transactions between large health insurance companies.
The fear is that the potential deals between the nation’s five largest carriers will disrupt the market, limit competition and increase pricing.
Officials say if all mergers come through, it would look at the deals collectively in an attempt to determine what effect the deals might have on the marketplace – specifically whether rate increases would be likely and whether any antitrust concerns would be raised.
Industry officials, however, say merger and acquisition activity is not likely to affect premium pricing. Instead, insurers’ “focus is on making sure consumers have affordable coverage,” a spokesperson for America’s Health Insurance Plans said.
Similarly, rates are expected to moderate as more people choose coverage over increasing tax penalties.
“People are getting services they needed for a very long time,” Marinan Williams, chief executive of the Scott & White Health Plan in Texas, told the New York Times. “There was a pent-up demand. Over the next three years, I hope, rates will start to stabilize.”