| March 21
March 21 U.S. consumers eligible for Obamacare
health plans could see double-digit price hikes next year in
states that fail to draw large numbers of enrollees for 2014,
including some states that have been hostile to the healthcare
law, according to insurance industry officials and analysts.
The early estimates come as insurance companies set out to
design plans they intend to sell in 2015 through the state-based
health insurance marketplaces that are a centerpiece of the
Affordable Care Act, President Barack Obama's signature domestic
policy achievement that is widely referred to as Obamacare.
WellPoint Inc, which sells plans on 14 Obamacare
exchanges, expects health insurance rates nationwide to be
higher. Increases for the Obamacare market that has signed up
about 5 million people to date is expected to outpace those in
the employer-sponsored market, which serves about 170 million
"Looking at the rate increases 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," Ken Goulet, president of
WellPoint's commercial business, told investors in New York on
The cost of health insurance is already a political hot
potato in this year's election campaign for control of Congress,
with Republicans warning of the potential for sky-rocketing
rates in their attempt to turn the ballot into a referendum on
Insurers have noted the difficulty of building and pricing
plans for 2015, which will mark the second year of the Obamacare
exchanges. Enrollment for 2014 closes on March 31, giving them
very little time to review the costs of covering their new
members before submitting proposed rates to insurance regulators
in May and June.
Industry officials and independent analysts say the lack of
hard data will mean huge variations in premiums, with increases
ranging from the high single-digit percentages in some states to
as much as 30 percent in others.
Slow enrollment is a potential harbinger of big price hikes
in over a dozen states, where technology failures or political
opposition to Obamacare may have deterred younger and healthier
residents from signing up.
Because the healthcare law prevents insurers from charging
sick people higher premiums, the participation of healthy young
people is needed to offset the cost of covering policyholders
with preexisting conditions. Government data so far has shown
about 25 percent of new Obamacare enrollees are in the younger
demographic of adults aged 18 to 34, well below the White
House's 38 percent target before last October's botched rollout.
Government actuaries predict an 8 percent increase in
overall net insurance costs next year. Last week, U.S. Health
and Human Services Secretary Kathleen Sebelius told a
congressional committee: "I think premiums are likely to go up,
but go up at a slower pace than what we've seen since 2010."
Some analysts say the more dire industry expectations
reflect companies' uncertainty rather than the true costs of the
"I think it'll be the exception. But there will be some
sections of the country with significantly higher insurance
premiums," said Larry Levitt, a policy expert at the nonpartisan
Kaiser Family Foundation, which tracks healthcare trends.
Levitt predicts that most states will see premium increases
of 7 percent to 10 percent in 2015, as insurers compensate for
factors including the rising cost of medical services and
reduced funding for a temporary federal program that compensates
insurers for high claim costs.
Levitt and other analysts said competition between plans
should also brake upward price momentum in most states, while
some consumers should also benefit from aggressive state
insurance regulators unwilling to allow big cost hikes.
Even after the end of open enrollment, a steady stream of
new customers is expected to transition into the Obamacare
marketplaces throughout 2014, due to life changes that allow for
special enrollments, including job loss, marriage and
parenthood. As a result, insurers could find themselves under
constant pressure to keep prices competitive.
"There's going to be this continuing need to market and get
new enrollees," said Sarah Thomas, research director at the
Deloitte Center for Health Solutions.
"I wouldn't be surprised to see higher rates in markets
where there's not as much competition. But I also wouldn't be
surprised if it's not as bad as some of the CEOs are making
out," she said.
The highest rate increases are expected among states whose
marketplaces have little competition between insurers, low
enrollment and hands-off regulators who do little to influence
Another contributing factor could be a decision by states to
allow insurers to keep older health plans on the market that do
not comply with Obamacare, an option offered by the President
following a public outcry over policy cancellations.
"In California, where enrollment has been so strong, it'll
probably be easier for actuaries to feel confident about their
pricing, versus states where enrollment is very anemic," said
Dan Mendelson, chief executive at the consulting firm Avalere
One metric of enrollment success - and a potential indicator
of future rate increases - is market penetration. In 16 states,
sign-ups represent less than 10 percent of the potential
marketplace population, according to a Kaiser Family Foundation
study of enrollment data released by the administration on March
1. Analysts say those markets could skew toward older, sicker
members, which raises the likelihood of rate increases.
The list includes Republican-led states that have rejected
Obamacare: Louisiana, Texas, Kansas and Oklahoma. But also on
the list are Democratic states with marketplaces that have been
stalled by technology problems: Massachusetts, Hawaii and
At the top of the enrollment success scale, Kaiser found
that Vermont has enrolled 54 percent of its potential market,
while California, Idaho, Maine, Michigan, New York, Rhode Island
and Washington have each enrolled about 20 percent or more.
(Reporting by David Morgan in Washington and Caroline Humer in
New York; Editing by Michele Gershberg, Bernard Orr)