END OF 2018 OPEN ENROLLMENT PERIOD (42 states)

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No One Could've Predicted... 2014: CA voters reject insurance rate regulation. 2015: Anthem jacks up rates up to 25%

Y'know, sometimes I don't even have to add anything myself:

California's insurance commissioner criticized healthcare giant Anthem Blue Cross for imposing an "excessive" rate increase on nearly 170,000 customers statewide.

Dave Jones said Wednesday that Anthem had failed to justify its 9% average rate hike that took effect April 1. Premiums are going up as much as 25% for about 4,000 policyholders.

"These rate hikes have real financial impact on Californians," Jones said. "It means less money for other essentials like food, clothing, housing and education." 

But state officials have no power to stop health insurance rate increases that are deemed unreasonable.

Jones lost his bid to change that last fall when Californians rejected the Proposition 45 rate-regulation measure by a wide margin.

(sigh)

As an aside:

In the Anthem case, these are "grandfathered" policies purchased prior to the 2010 federal health law being enacted. They don't comply fully with the Affordable Care Act, but consumers can hold on to them as long as they don't make major changes in deductibles or other benefits.

...Jones said his department's actuaries determined that a 1.5% increase was justified in this case, but the company disagreed. The regulator said customers would have saved $33.6 million with the lower increase.

In other words, the 170K customers who had their rates jacked up 9% instead of 1.5% were those who refused to switch to an ACA-compliant policy (ie, a QHP or similar). $33.6 million / 170K people = about $200 apiece.

So, to summarize:

  • California voters refuse to let insurance commissioner regulate insurance rates.
  • 170K California voters refuse to participate in Obamacare policies.
  • Insurance Company jacks up their rates an extra $200 apiece.

Don't worry, I'm sure these folks will find a way to blame the ACA instead of Anthem (or themselves for rejecting Prop 45).

Once again, folks, in addition to the "3-legged stool" (individual mandate, guaranteed issue & tax credits), the only way that the Affordable Care Act works is if the insurance companies are also heavily regulated.

Certainly increased competition helps to some degree, and excessive rate increases are is partially dealt with by things like the 80/20 Medical Loss Ratio rule. However, the other important provision of the ACA is the Rate Review rule:

Rate Review helps protect you from unreasonable rate increases. Insurance companies must now publicly justify any rate increase of 10% or more before raising your premium. This does not apply to grandfathered plans.

Now, you can argue that it's still letting them off the hook to make the first 10% a gimme; I certainly think so. However, there's two important points which are at play here in California:

  • Without Prop 45, the CA insurance commissioner can yell and scream but can't do a damned thing about those rate hikes.
  • Even the "public justification" provision doesn't apply to pre-ACA policies anyway.