Health industry officials say Obamacare premiums will likely double, and in some cases triple, in certain parts of the country next year, and announcements of rate hikes could come within months, potentially adding to the pressure on Democrats going into the midterm elections.
The botched rollout of the federal healthcare program, including its numerous delays and changes, is one of the chief reasons for impending hikes, officials told The Hill, as is the impact on insurers of Obamacare’s new fees and regulatory restrictions.
“Everyone knows that the way the exchange has rolled out … is going to lead to higher costs,” a senior insurance executive who requested anonymity told The Hill.
Another official told The Hill, “All these major delays on very significant portions of the law are going to change what it’s going to cost.”
But the most significant cause of rate increases, officials say, is related to the administration’s erroneous projections about the number of young healthy consumers who would enroll.
“Demographics matter a lot because they will help determine whether the health insurance market goes into a death spiral (or requires hefty federal subsidies to keep it from doing so),” Megan McArdle writes in her column for Bloomberg View.
“Young healthy people, and a lot of them, are needed to keep the market stable and premiums low. As we head into the final few weeks, we have a pretty good idea of how many young healthy people there will be, and the answer is: a whole lot fewer than the healthcare wonks were expecting.”
The Obama administration estimated that roughly 40 percent of Obamacare’s enrollees would need to be between the ages of 18 and 35 to keep Obamacare financially solvent and premiums would cover costs.
The picture is expected to become clearer as insurers begin the process this spring of filing their rate proposals with state insurance commissioners.
It is possible that some insurers will continue to hold rates low to remain competitive, though some initially underpriced their policies to attract customers in the first year, expecting to raise rates in the second year, according to The Hill.
If the predictions of major rate increases come to fruition, the political fallout for the Democrats — who will already be under intense pressure in the midterm elections due to the troubled healthcare law — could be even more significant.
Rate hikes would also likely undermine Obamacare enrollment efforts in 2015, The Hill reported.
Source: The Hill
