END OF 2018 OPEN ENROLLMENT PERIOD (42 states)

Time: D H M S

UPDATE: Gee, that sounds familiar: Some carriers stating 15-40% of rate hikes will be due SPECIFICALLY to Trump/GOP Sabotage

 

Read this. Read the whole thing, thanks. Then come back here.

Done?

To summarize: For months now I've been predicting/warning that regardless of whatever legitimate risk pool issues the ACA exchanges may still be having in many parts of the country which could lead to significant rate 2018 rate hikes no matter what, there's the additional Fear/Uncertainty/Doubt factor which is being deliberately created by Donald Trump, Tom Price and the Congressional GOP. Insurance carriers hate uncertainty above all else, and I've been expecting them to do one of two things as the 2018 rate filing deadlines approach: Either jack their rates up significantly to cover themeselves for the unholy mess brewing ahead...or to simply get out of Dodge by either dropping out of the exchanges or fleeing the entire individual market altogether, on & off exchange. Most likely, I've been saying, it'll be a combination of both.

For those who do choose to stick around, I had no good way of quantifying the hard dollar/percentage impact, but a few weeks ago, the Center for American Progress attempted to do exactly that. They boiled it down to roughly the following:

  • ACA left alone, run properly, no fears about CSR reimbursement or Mandate Penalty collection: Around 7% nationally on average
  • ACA semi-run properly, no fears re. Mandate Penalty, but CSRs cut off: Around 27% or so nationally on average (20% + 7%)
  • ACA subjected to full assault: CSRs cut off and Mandate Penalty not enforced: Around 41% or so nationally on average (34% + 7%)

Obviously these are very rough estimates, and they'd be expected to vary widely by state, rating area, carrier, plan ad so forth, but you get the general idea. I should also note that the ACA's insurance carrier surcharge tax (which helps to actually pay for the subsidies and Medicaid expansion), which I believe is around 3%, is scheduled to re-start next year, which accounts for a portion of the rate hikes...assuming the AHCA isn't passed and the ACA's taxes aren't killed, of course.

So, that's all hypothetical and conjecture. What's the reality?

Well, so far only 3 states have filed their initial rate hike requests: Virginia, Maryland and Connecticut, and the numbers aren't pretty:

  • Virginia: 30.6% weighted average hike requested for unsubsidized individual market plans
  • Maryland: 44.7% weighted average hike requested for unsubsidized individual market plans
  • Connecticut: 23.8% weighted average hike requested for unsubsidized individual market plans

Ouch. OK, but what's causing those rate hikes? We can account for 3 points of it due to the carrier tax, another 2.5 points due to normal inflation, and let's call it another 4 points due to "normal" medical expense hikes and whatnot, for around 10 points total. "Trend" I believe it was called by the CT Insurance Dept. website:

Trend: Trend is a factor that accounts for rising health care costs, including the cost of prescription drugs, and higher demand for medical services.

That leaves around 20%, 35% and 14% unaccounted for...and that's where the debate comes in: How much is due to the ACA exchanges still not being stable (ie, lousy risk pool issues) vs. Trump/GOP F.U.D. factors?

Well, according to a new article by Sarah Kliff of Vox, we may have at least a partial answer:

Some health insurance plans selling on the Obamacare marketplaces are planning steep 2018 rate increases, in part to account for the uncertainty over how the Trump administration will administer the law.

The administration has been aggressively ambiguous about key policy issues, like whether it will enforce the health care law’s individual mandate or pay out insurance subsidies aimed at the lowest-income Obamacare enrollees.

(in other words, the Cost Sharing Reduction reimbursements mandated by the law but subject to an ongoing lawsuit brought by...the GOP).

In response, insurance executives tell Vox they will charge steeper rates in 2018 in order to avoid losing money. Others are quitting the marketplace altogether, saying the future just looks to uncertain to take a gamble.

“We were hoping for more stability this year,” says Chet Burrell, chief executive of Carefirst, a Blue Cross Blue Shield Plan in the D.C. metro area. “But these factors have lead to instability, and the beginning of a death spiral.”

...The uncertainty that the Trump administration has created over how they will run health law programs, industry sources say, has made those problems worse — just when some thought the marketplaces were beginning to stabilize.

“The health plans I work with want to stay in, but the Trump administration is not making that easy,” says insurance industry consultant Robert Laszewski.

Multiple health insurance plans have told Vox that their premiums will be higher in 2018 specifically because of Trump administration actions.

This includes CareFirst, a BlueCross BlueShield plan in Maryland, Virginia, and Washington, DC. The insurer submitted its 2018 premiums last week, averaging a 52 percent increase in Maryland and 39 percent in Virginia.

I actually have CareFirst down with only a 21.5% average hike request in Virginia, but GHMSI is another CareFirst subsidiary asking for a 54.3% hike, so 39% sounds about right when you combine the populations. The 52% in MD lines up pretty closely with my data (50% and 59% respectively for the CareFirst subsidiaries).

Burrell says that his plans would have had hikes this year anyway, because it has lost money during its three years on the Obamacare marketplaces. But it tacked an extra 15 percent onto its premiums because it does not expect the Trump administration to enforce the individual mandate.

“The current approach at the federal level has been to say they’re not going to enforce it,” he says. “We think the effect of that is to encourage healthy people not to enroll.”

Now, I have to be careful here. The "extra 15%" could mean one of three things:

  • It could mean that they added 15% of the original hike to the total...in other words, let's say they'd normally bump it up by 45%, and tacked 15% of that on top for a total of 52%.
  • It could mean that 15% of the total increase is due to Trump/GOP F.U.D.
  • Or, it could mean 15 full percentage points...which would amount ot 30-40% of the total rate hike (ie, 15 out of 39 or 15 out of 52)

In other words, for CareFirst at least, the breakout could potentially be something like:

  • Maryland: 3 points Carrier Tax, 7 points inflation/etc, 27 points risk pool problems, 15 points Trump FUD
  • Virginia: 3 points Carrier Tax, 7 points inflation/etc, 14 points risk pool problems, 15 points Trump FUD

Now, as you can see, the ACA's risk pool problems are still definely part of the mix--a 27% rate hike would still be a major problem for unsubsidized enrollees all by itself--but holy crap is the Trump factor playing a major part here.

OK, that's one carrier. Perhaps it's an outlier?

Evergreen Health, a small insurance plan in Maryland, wrote in government rate filings that uncertainty around the individual mandate and other policy issues was the “primary driver” of its requested 27 percent premium increase.

No beating around the bush there. I don't know if "primary driver" means "more than 50%" but it's at least a plurality...let's call it 40% or more by itself, or at least 11 points of the total hike.

...“It’s pretty clear we need more certainty to be able to file the rates assuming we get those federal payments,” says Paul Markovich, chief executive of Blue Shield of California. “Short of that, we’d have to assume they’re not being paid.”

Markovich says that his plan is currently preparing different rates to respond to different scenarios that could play out. The hard part will be choosing which one to submit, if the Trump administration does not provide further clarity.

...New Mexico Health Connections, a non-profit co-op plan, isn’t taking any chances.

Chief executive Martin Hickey says the co-op currently plans to file higher premiums that assume the Trump administration won’t make those subsidy payments.

“Uncertainty breeds higher costs,” he says. “We have to plan for the worst case scenario until it finally gets decided. We have a lot of things to focus on, we’re grinding out hours over rates, and it doesn’t help that people are running around with zombie bills.”

The article then goes on to talk about the carriers which are simply bailing altogether, but I think you get my point. In a nutshell...

Obama saw these situations as a problem. Republicans see them as an opportunity.

UPDATE: Over at Bloomberg News, Zachery Tracer has pretty much the same story, but with some additional quotes:

“Failure to enforce the individual mandate makes it far more likely that healthier, younger individuals will drop coverage and drive up the cost for everyone,” Chet Burrell, Chief Executive Officer of CareFirst, said in a statement. The insurer is asking for an at least 50 percent increase in premiums in Maryland. Burrell said uncertainty over the mandate played a “significant role” in the insurer’s rate requests.