With Affordable Care Act’s Future Cloudy, Costs for Many Seem Sure to Soar

https://www.nytimes.com/2017/10/03/health/aca-insurance-rate-increases.html

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Health insurers are aggressively increasing prices next year for individual policies sold under the federal health care law, with some raising premiums by more than 50 percent.

By approving such steep increases for 2018 in recent weeks, regulators in many states appeared to be coaxing companies to hang in there, despite turmoil in the market and continuing uncertainty in Congress about the future of the law, the Affordable Care Act.

In Georgia, the state insurance commissioner, Ralph T. Hudgens, an outspoken critic of the law, often referred to as Obamacare, said the rates he approved would be up to 57.5 percent higher next year. The state had already lost Anthem, the large insurer that offers for-profit Blue Cross plans in several states, which left many markets in Georgia.

“Obamacare has become even more unaffordable for Georgia’s middle class,” Mr. Hudgens said in a statement. “I am disappointed by reports that the latest Obamacare repeal has stalled once again and urge Congress to take action to end this failed health insurance experiment.”

In Florida, the average rate increase will be about 45 percent, according to state regulators. And in New York, where officials said prices would still be below where they were before the law took effect, premiums were expected to increase by an average of about 14 percent. Many states have not made insurers’ rate increases public, and experts said the rise in costs for consumers could run from 10 percent to nearly 60 percent.

There are exceptions. Minnesota, which sought a federal waiver to address the high cost of premiums, said this week that prices for plans sold on the state exchange there would remain stable or drop significantly in 2018.

Those who qualify for federal subsidies, a group that accounts for about 85 percent of the roughly 10 million people who buy insurance through the marketplaces created under the health law, will largely be shielded from the higher prices.

Regulators in Florida and New York said that residents of those states who qualified for the most generous subsidies could see lower prices next year, depending on which plan they buy. In some places, the least expensive plans could become free after customers apply their subsidies. (Deficit hawks will probably complain about the higher federal outlays for subsidies.)

People who earn too much to qualify for financial assistance will feel the brunt of any increases. Because many insurers raised prices most sharply on plans that are attractive to people who receive the most generous subsidies, those unable to get subsidies may have to shop for plans that are not affected or look beyond their state marketplaces for lower-priced options.

The final prices and policies available for all plans may not be public until Nov. 1, leaving many consumers confused about coverage costs as a shortened period of open enrollment for health care insurance under the Affordable Care Act begins.

The insurance companies have defended the rate increases, saying they were unavoidable under the current circumstances. After the latest Senate effort to repeal the health law collapsed, insurers still have no commitment about whether the government will continue to allocate millions of dollars in critical financing. Some lawmakers have renewed talk of a bipartisan solution to guarantee that the money keeps flowing, but there is no resolution — forcing insurers to set rates without an agreement.

The Trump administration has sent mixed signals about whether it will enforce key elements of the law like the individual mandate, which encourages healthy people to sign up for insurance or be charged a tax penalty. If insurers cannot spread out the cost of coverage for people with high medical bills over a large enough group, they may be inclined to raise premiums even higher.

“We’re all pricing up for it,” said Dr. Martin Hickey, the chief executive of New Mexico Health Connections, one of the few remaining insurance start-ups created by the federal law. New Mexico Health Connections recently expanded an existing partnership with Evolent Health, a public company, which will provide additional capital.

In New Mexico, the average rate increase for plans sold on the state marketplace is about 30 percent. “Half of that increase is due to the uncertainty in Washington and the inability to lead,” said John G. Franchini, the state insurance regulator. The four insurers selling policies in the state marketplace are offering more types of plans.

After a slow start, many insurers have been making money in the individual market for the past year or so. Premiums have generally risen faster than underlying medical expenses, according to a recent analysis by the research firm Mark Farrah Associates. With rates set to climb much higher next year, insurers could see profits rise significantly too.

But questions about the insurance market’s future make it nearly impossible to come up with accurate projections. Regulators and actuaries said that the higher rates reflected a conservative approach as a cushion against potentially sizable losses.

“It’s very hard for a regulator to deny those rate increases when we can take a look at their bottom line and can tell they can’t continue if they can’t keep their head above water,” said Mike Kreidler, Washington State’s insurance commissioner and a supporter of the health law.

Actuaries said that the higher rates were justified. The insurers “are really struggling,” said Kurt Giesa, a partner with Oliver Wyman, a consultant that has worked with regulators to review rates. “They have been working hard to adapt to what they are faced with right now,” he said.

And although they have been raising prices aggressively, “it doesn’t mean that insurers couldn’t lose money,” said Deep Banerjee, an industry analyst for Standard & Poor’s who has been following the improved profitability of Blue Cross plans. “The trend has been improving but the market is still fragile,” he said.

The uncertainty over paying insurers for the so-called cost-sharing reductions, which limit out-of-pocket medical costs for people with low incomes, remains problematic. Most state regulators let insurers set prices to cover the cost of the required reductions, but several did not.

The Trump administration has been paying insurers on a month-to-month basis; a legal challenge over the payments by House Republicans has left the issue in limbo.

In the states that did not allow insurers to account for a loss of federal funding, the rates would be “inadequate” if that funding went away, said David M. Dillon, a fellow with the Society of Actuaries who has also worked with several state regulators. They “are just hopeful that something can be fixed later on,” he said.

Two insurers pulled out of the markets at the last minute because of the confusion. Medica stopped offering coverage in North Dakota next year because regulators said insurers had to assume the financing would continue; Anthem abandoned the Maine marketplace because the money had not been guaranteed.

Mr. Kreidler of Washington approved two sets of rates but is only allowing insurers to charge the lower set. If the government stops paying for the subsidies, he said, “It’s going to be a real challenge.”

If Congress or the administration decide to keep providing the subsidies, prices will be higher than necessary if insurers raised their rates to make up for a loss of the funding. “We’ll see if we can lower those rates with the permission” of the federal agency responsible for overseeing the marketplace, Mr. Franchini of New Mexico said.

Some insurers think a decision on the cost-sharing money could come too late.

CareFirst, a Blue Cross insurer, offers plans in Virginia and Maryland. Virginia allowed CareFirst to assume a lack of financing; Maryland regulators prohibited insurers from setting higher rates based on a loss of subsidies.

“You have this unbelievable contradiction,” said Chet Burrell, CareFirst’s chief executive. In Maryland, where the company is losing money on individual policies, it could sustain much deeper losses if the federal money stopped coming in.

“I don’t think you can work it out,” he said. “The workout is you will have to eat it this year.”

Like other insurance executives, Mr. Burrell worries that the higher prices will eventually discourage too many healthy people from enrolling. In Maryland, he said, only one-third of those buying coverage are eligible for subsidies. Everyone else pays full price. The most popular type of plan could come with premiums of $373 a month to $686 a month for a 40-year-old.

“Given the size of the rate increases, we think healthier people will continue to opt out of the risk pool,” he said, suggesting that would lead to rates being even higher in 2019. “If that occurs, then you’re in a death spiral,” he said, because as rates climb, more healthy people drop out, sending prices even higher. Mr. Burrell said he was working with regulators in Maryland to potentially create a fund that would help care for patients with the very high medical bills while possibly lowering overall premiums.

But even insurers in states that have allowed for the loss of funding are not sanguine.

“I think it’s going to be a stumbling in the dark next year because of all the uncertainties,” Dr. Hickey of New Mexico Health Connections said. The changing circumstances and inaction by Congress have forced insurers to raise rates and experiment with different plans for those who are not eligible for federal assistance.

“It’s almost like the beginning, again,” he said.