Three weeks before the midterms Democrats should not expect to see nationwide headlines of 15% or 20% or 25% rate increases on the Exchanges. There will be some states and some insurers with those types of rate increases, but there will be a number of insurers with either “normal” increases of less than 10% or actual rate decreases.
If insurers priced perfectly for 2018, we would expect the following factors to drive premiums for 2019:
- Normal Medical utilization (+7%)
- Repeal of the health insurance premium tax (-3%)
- Repeal of the individual mandate (+10%)
- Proliferation of association health plans and short term underwritten plan rule (+5%)
- Further negative messaging/advertising/navigator cuts against the ACA (0% to 5%)
This produces a net 19% to 24% premium increase on top of the 18% (Gold/Bronze) and 33% (Silver) increases for 2018.
However insurers massively overpriced in 2018.
In Tennessee, BCBST is projecting significant premium decreases (via Holly Fletcher at BirdDog:)
But, BCBST — one of the insurers in the U.S. with the most payments on the line, according to Axios — filed its request on the deadline: It requested an average 10.9 percent decrease although it had planned for an 18 percent decrease until the HHS announcement.
The insurer has been expecting $75.8 million in estimated payments from HHS in relation to the individual and small group plans it offered on the federal exchange for 2017 and 2018, said Danielson.
Insurers seem to have massively overpriced for 2018. We are seeing that with the initial MLR where insurers paid out 68% of their premium dollars in claims for the first quarter of 2018, down from a profitable 75% in 2017 and way down from the high 80s in 2015/2016. We are seeing insurers enter new markets because there is too much money on the table. We are seeing insurers react as if they massively overpriced in all dimensions.
The same story is happening in Colorado:
Colorado rate requests are out – 6% average increase, with Anthem requesting a rate decrease https://t.co/ZmufDKQzFH pic.twitter.com/BWd8212FNW
— Hannah Recht (@hannah_recht) July 13, 2018
The other thing to keep in mind is several states are starting reinsurance programs that effectively shifts some money from the subsidized portion of the pool to the non-subsidized portion of the pool. Net premiums will also be lower than they otherwise would have been of the approved 1332 waivers.
The argument on the cost of Trump administration actions becomes one of a counterfactual — “Prices would have gone down by 20% or 30% instead of 11% if things were different” That is a convincing argument for actuaries and academics. In my opinion, it is not a strong political argument.
Steeplejack
Yeah, it sort of sounds like sour grapes, no matter how true it may be. And, as with so many things, the explanation would be too long and boring for most people.
Buskertype
in the last paragraph did you mean to write “prices would have gone up…”?
Steeplejack (phone)
@Buskertype:
I read it as overpricing for this year was so huge that even with the “cost of Trump administration actions” prices are coming down but would have come down even more without the GOP fuckery.
Paul W.
Ugh, this is a big loss in terms of the politics. I never thought I would be rooting for a health insurance premium increase (I’m on the individual market here in NYC), but it would have been worth it to me personally to pay extra but be able to demonstrate, again, how incompetent the Trump administration is.
NobodySpecial
Smells almost like a multiyear setup. Massive bump during the end of the Obama administration to drive bad press, smaller one during the obvious Blue Wave year to give Trump something to point to.
Gvg
At here will be at least some stories about people who say their rates went up. People always seem to think they are typical and some people have perception their bills are unfair. Their are always outliers too. It’s just something to be cautious about jumping on a story.
People whose bills went up last year because of GOP sabatoge have a reason to still be mad and maybe they will speak up loudly enough to be heard. It’s not going to be a driving issue though I think.
Consuela Bananahammock
Any plans to model the impact of some of those reinsurance programs closer to Open Enrollment, David? Would be interested to see how the reinsurance programs based on chronic conditions fare compared to those that are based on the size of the claims made or other qualifying factors. Don’t know much about that area but was intrigued by the idea that some programs would automatically take over risk for high-cost chronic conditions at the time of condition identification.
As for the sabotage storyline, I don’t think it’s all that fair to be upset about the Navigator funding. I don’t think I’ve seen any research yet that has indicated they had a meaningful impact on enrollment rates. I think marketing and Medicaid expansion (per that recent analysis in HealthAffairs of the CA Exchange) are probably the big drivers of pool health and premium cost containment. While I don’t have a solid basis for this, I lean toward marketing being better at driving young people to the pools than in-person events and advocacy groups. There’s far more sabotage in cutting the marketing budgets and the use of earned media (I think that’s the term) in messaging that the ACA is dead through news outlets.
David Anderson
@Buskertype: No, I mean prices would have decreased significantly if we held policy constant as of November 1, 2017 and the drop would be much greater than it is now projected to be in some states
Buskertype
@David Anderson: thanks… I get it now