Opponents of President Obama’s health care law are eagerly scouring the paperwork insurers file with states, looking for early evidence of “rate shock” — rising prices ahead of full implementation of the state “exchanges” that begin next year.
Open enrollment begins in October for the exchanges, or state-based markets where those without insurance will be able to purchase policies, often with government subsidies. But even before that, insurers are submitting their plans to states, and in at least one instance a major player in Maryland’s market asked for approval of a 25 percent premium increase.
Sen. Orrin G. Hatch of Utah, the ranking Republican on the Senate Finance Committee, is “closely monitoring the proposed plan rates all across the country and especially in his home state,” a spokeswoman said.
One congressional aide said Senate Republicans are watching the rates “like a hawk” because they know the still-to-come fight over implementation will not even be relevant if the initial rates send the reforms into a “death spiral.”
But analysts said the picture is not that clear.
Under the law, insurers can no longer turn away people for having pre-existing health conditions, so average consumers may expect to pay more with sicker patients entering the market, according to a Kaiser Family Foundation analysis. But the analysis also said premium increases could be the result of consumers getting better benefits.
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“It’s something that people feel strongly about, philosophically, and there are political points to be made,” said Gary Claxton, a vice president of the nonpartisan Kaiser Foundation.
Health and Human Services Secretary Kathleen Sebelius has accused Republican lawmakers of ignoring the other side of the ledger.
The initial rates may decrease because they are subject to a “rigorous review process” by state regulators, and tax credits on a sliding, income-based scale will help consumers on the exchanges pay for their premiums, she told a House subcommittee on Capitol Hill last week.
So far, insurers have submitted rates in Vermont, Rhode Island and Maryland. Although the New England states’ rates didn’t make much of a splash, Maryland’s largest insurer — CareFirst BlueCross BlueShield, which insures 70 percent of the state’s individual market — proposed raising premiums by an average of 25 percent.
“I want to stress that these rate filings reflect the carriers’ requested rates,” state Insurance Commissioner Therese M. Goldsmith said in a statement attached to the filings last week. “In Maryland, the premium rate a carrier requests is not always the rate that is granted.”
Republican Rep. Andy Harris, a doctor from Maryland, said in an interview the proposed rate increase is a real problem that will be repeated elsewhere.
He thinks CareFirst is “realistically pricing the risk” because they are experienced in the individual market. Young and healthy consumers may opt to remain uninsured and pay a penalty as low at $95 for flouting the law’s individual mandate in the first year, he said.
The premium tax credits were supposed to tempt younger, healthier consumers into the exchanges, tempering risk within the pool and ostensibly decreasing premium costs among the broader market.
“I think Sen. [Max] Baucus hit the nail on the head when he said it’s going to be a train wreck,” Mr. Harris said, referring to the Montana Democrat’s now-famous remarks from a hearing this month, in which he challenged the Obama administration to educate small businesses and others about the law’s effects.
Mr. Claxton said the state-by-state submissions offer a look at how insurers are sizing up the situation, but it’s too early to draw conclusions about the plans’ value and affordability.
“It’s the start of the story,” he said, “but not much of the story yet.”
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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