Under Obamacare, health insurance companies that want to jack up their premiums by more than 10 percent in a year are required to submit their requests to state and federal regulators for review. Yesterday, the U.S. Department of Health and Human Services posted all of those petitions online in an easily searchable database, which revealed that a number of insurers are, in fact, asking for double-digit rate hikes. As Politico notes, some large plans could theoretically get 20 or even 30 percent more expensive. The New York Times found one insurer in Georgia looking to up its premiums by as much as 85 percent. The Wall Street Journal, which reported on the news earlier after states began making the filings public, thinks it is “setting the stage for an intense debate this summer over the law’s impact.”
So what does this tell us about the overall state of the insurance market, and the effects of Obamacare on the cost of health coverage? In spite of what John Boehner might have you think, not much. Because, again, the administration has done nothing but offer a list of the companies that are seeking especially large bumps. “Trying to gauge the average premium hike from just the biggest increases is like measuring the average height of the public by looking at N.B.A. players,” Larry Levitt of the Kaiser Foundation told the Times. Moreover, some states may ultimately end up rejecting the gaudiest requests if they’re deemed unjustified.
How skewed is the federal database? Here’s one telling illustration from ACAsignups.net founder Charles Gaba. In Washington State, 17 insurers submitted health plans for next year, requesting an average rate increase of 5.4 percent. Only three of those companies asked for a big enough hike to show up on the federal rate review site. Together, they requested bumps averaging 18 percent, more than three times larger than the actual statewide mean. That gap should make everyone think twice before drawing conclusions from yesterday’s data dump.
The new federal numbers are useful in some senses, especially because insurers are required to explain why they are requesting such high increases. Obamacare has profoundly changed the insurance landscape by requiring companies to cover people who would have previously been shut out of the market due to pre-existing conditions, while also forcing more young and healthy Americans to pay for coverage. And as the Times and Politico both noted, some plans seemed to miscalculate how sick their customers would be, and are adjusting their prices now that they have a better picture of what the pool looks like. Others have said they are trying to compensate for the rising cost of pharmaceuticals. Other plans cut rates last year in order to compete, and are now reversing course in order to make a profit.
But again, that only means some companies guessed very wrong about their customer base, or are struggling with drug costs. There’s a very strong chance we’re talking more about the exceptions rather than the rule.