Top Obamacare insurer expects ‘double-digit plus’ rate hikes
The top insurer participating in Obamacare exchanges is predicting that it will ask for “double-digit plus” increases in its May rate proposal for 2015 premiums on exchange plans.
“On a year-over-year basis on our exchanges, and it will vary by carrier, but all of them will probably be in double-digit plus,” said Ken Goulet, executive vice president for commercial and specialty business at Wellpoint, Inc., Bloomberg reports.
WellPoint is the largest commercial insurance company in the exchanges so far, with over 500,000 people signed up for its Obamacare policies by the end of January. After issuing its 2014 earnings forecast late last week, officials had good news. They reported that company had expanded its customer base with the health care law, the average age of enrollees was as expected, and that the company was “optimistic” — giving confidence to the health care law’s supporters.
But Obamacare reinsurance payments are set to decrease in 2015, leaving insurers to keep up their income by raising premiums for all its exchange customers. The fees, imposed on group health plans, will fall from an expected $12 billion for 2014 premiums to $8 billion in 2015, according to consulting firm Aon.
The provision amounts to insurance for the insurers themselves, allowing the federal government to redistribute the funds to health insurers on the exchanges whose pool of applicants was older and sicker than normal.
Aetna and Humana, the other two top insurers on Obamacare exchanges, have not commented on their proposed rates for 2015. Insurers are required to submit their proposals to the Centers for Medicare and Medicaid Services (CMS) in May.
Health and Human Services secretary Kathleen Sebelius has said rates will likely rise next year, but that any increases will be “far less significant than they were before the passage of the Affordable Care Act,” but the prospect of a “double-digit plus” rate increase doesn’t make that seem likely.
From 2009 to 2010, when Obamacare was passed, insurance premiums in the individual market rose by 13 percent on average, according to the Kaiser Family Foundation.
Over the past year during the Affordable Care Act’s launch, premiums in the individual market shot up by 39 percent. For family coverage, the increase was 56 percent on average. According to data from private insurance exchange eHealthInsurance, the 2013-2014 hikes were more than the past eight years. (RELATED: Report: Premiums rising faster than eight years before Obamacare combined)
Avalere Health CEO Dan Mendelson told Bloomberg that WellPoint may be responding to the Obama administration’s unceasing changes to the health care law.
“The rules of the road keep changing,” Mendelson said. “These companies have to hedge their bets.”
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