State officials under pressure to OK ObamaCare premium hikes

State insurance officials say they are feeling pressure to approve large ObamaCare premium increases to prevent more insurers losing money from dropping out of the market altogether. 

Tennessee’s insurance commissioner, Julie Mix McPeak, this week announced the approval of premium hikes of 62 percent, 46 percent and 44 percent, respectively, for the three insurers on the state’s marketplace. 

{mosads}She said her department’s actuaries had found the rate increases to be justified.

“I didn’t feel like I had any choice but to approve those rates when it came back to be actuarially justified,” she said. 

Tennessee is unlikely to be alone in authorizing premium hikes, either. In Maryland, officials are expecting a hike.

“There are going to be significant increases in the individual market,” said Al Redmer, the insurance commissioner in Maryland, where the rates are still being reviewed. 

It is unclear how many other states may allow large premium hikes.

An early estimate from ObamaCare analyst Charles Gaba finds that for nine states the average approved premium increase for next year is 27.6 percent. 

Most consumers will not feel the effects of these increases, because they receive ObamaCare subsidies that cap the percentage of income they have to spend on premiums. The Department of Health and Human Services released a study on Wednesday finding that even if all premiums increased by 25 percent next year, 73 percent of consumers would still be able to find a plan for less than $75 per month, because of the health law’s subsidies. 

Still, roughly 15 percent of ObamaCare enrollees do not receive subsidies and will have to bear the full cost of the increases. A rise in subsidies to make up for premium increases also increases government spending. 

The premium hikes could point to deeper problems for ObamaCare in the future.

Some insurers warn they could drop off the ObamaCare marketplaces altogether, or at least in some areas of a state, if they don’t stop losing money. 

Several major insurers, including UnitedHealthcare and Aetna, have already announced that they will withdraw from many ObamaCare marketplaces next year, pointing to financial losses. 

McPeak, the Tennessee commissioner, said that part of her decision to approve the large premium hikes came from her fear that insurers could drop out if the increases were not approved, possibly leaving some consumers with no insurance option at all.  

“We’re certainly not at a place of collapse right now, but I am very worried that, like I mentioned, any one carrier deciding to withdraw from our marketplace could cause a disastrous effect, because the other insurers may follow suit,” she said. “And at this point I don’t feel like we have a successful exchange because, like I said, half of our counties have only one option on the exchange today and so having any change in the level of competition may not allow our exchange to survive.”

There is currently one county in Arizona where there are no insurers slated to offer ObamaCare coverage next year, after Aetna pulled out of many markets, citing its financial losses. 

North Carolina’s insurance commissioner, Wayne Goodwin, said he is concerned that there could be areas of his state with no ObamaCare options. Blue Cross Blue Shield of North Carolina, currently set to be the only option in much of the state, has said it is waiting to see whether its premium increase is approved before deciding whether to continue to offer ObamaCare coverage statewide next year. 

North Carolina Blue Cross spokesman Lew Borman wrote in an email that “[We] haven’t heard from the Dept of Insurance on rates,” and “all options [are] still on the table.”

State insurance commissioners are required to review premiums for the exchanges under the ObamaCare law. It’s a provision that President Obama himself has touted as a check on premium increases.

Obama last year traveled to Tennessee to tout the healthcare law and specifically pointed to the premium rate review process as an important safeguard against premium hikes.

“There were a lot [of] stories in the newspaper, just like there are this year, about, oh, premiums are skyrocketing and this is going to be terrible and all that,” Obama said then, speaking of the 2014 process. “When all the dust settled and the commissioners who were empowered to review these rates forced insurance companies to justify what they were seeking, what you discovered was, is that the rates actually didn’t go up as much as people thought.”

But this year, McPeak granted large premium hikes to the insurers serving her market.

The premium hikes could become election fodder in presidential and congressional races this fall. Republicans have already seized on reports of the increases.

Sen. John McCain (R-Ariz.), facing reelection this year, has been one of the most vocal Republicans on ObamaCare. 

After Aetna pointed to its financial losses earlier this month, McCain said, “The crumbling of Obamacare at this alarming rate is simply unsustainable,” and added that it would leave Arizona residents with “more expensive, less accessible health care.”

In North Carolina, Goodwin acknowledged that the possibility of Blue Cross dropping out in some areas affects his decision on approving the rate increases. “It is certainly a factor if a company is considering leaving the market in some respect,” Goodwin said. 

Goodwin wrote to HHS in February saying that he was “highly concerned” that some consumers could be left with no choices at all if insurers dropped out of the market. 

Kevin Counihan, a top HHS official, wrote back six months later, in August, and apologized for the “delayed response.” 

He wrote that the administration is “willing and ready to work with state insurance regulators to attract more issuers” and retain those currently on the marketplace.

McPeak, the Tennessee commissioner, likewise said that it is “extremely concerning” to her that the Blue Cross plan there could drop out of some areas, leaving consumers with no options. 

Tennessee’s Blue Cross plan said in a statement that it will make a decision in “mid-September” on its participation. 

HHS spokeswoman Marjorie Connolly said the department is “confident” that consumers in both Tennessee and North Carolina will “continue to have affordable options for coverage next year.”