Health premiums soar nationwide
Insurers win double-digit increases despite new federal law
1/7/2013WASHINGTON — Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama Administration’s health-care law was to stem the rise in insurance costs for consumers.
Particularly vulnerable to the high rates are small businesses and people who do not have employer-provided insurance and must buy it on their own.
In California, Aetna is proposing rate increases of as much as 22 percent, Anthem Blue 26 percent, and Blue Shield of California 20 percent for some of those policy holders, according to the insurers’ filings with the state for 2013.
In other states, including Ohio and Florida, insurers have been able to raise rates by at least 20 percent for some policy holders.
The rate increases can amount to several hundred dollars a month.
The proposed increases compare with about 4 percent for families with employer-based policies.
Under the health-care law, regulators are required to review any request for a rate increase of 10 percent or more. The requests are posted on a federal Web site, healthcare.gov, along with regulators’ evaluations.
The review process not only reveals the sharp disparity in the rates themselves, it also demonstrates the striking difference between places like New York, one of the 37 states where legislatures have given regulators some authority to deny or roll back rates deemed excessive, and California, which is among the states that do not have that ability.
New York, for example, recently used its sweeping powers to hold rate increases for 2013 in the individual and small group markets to under 10 percent. California can review rate requests for technical errors but cannot deny rate increases.
The double-digit requests in some states are being made despite evidence that overall health-care costs appear to have slowed in recent years, as many people put off treatment because of the weak economy.
PricewaterhouseCoopers estimates that costs may increase just 7.5 percent next year, well below the rate increases being sought by some insurers.
But the companies counter that medical costs for some policy holders are rising much more rapidly than the average, suggesting they are in a sicker population.
Federal regulators contend that premiums would be higher still without the law, which also sets limits on profits and administrative costs and provides for rebates if insurers exceed those limits.
Critics, including Dave Jones, the California insurance commissioner and one of two health plan regulators in that state, said that without a federal provision giving all regulators the ability to deny excessive rate increases, some insurance companies can raise rates as much as they did before the law was enacted.
But policy experts say the law probably has kept at least some rates lower than they otherwise would have been.
“There’s no question that review of rates makes a difference, that it results in lower rates paid by consumers and small businesses,” said Larry Levitt, an executive at the Kaiser Family Foundation, which estimated in an October report that rate review was responsible for lowering premiums for one out of every five filings.
If insurers collect premiums and do not spend at least 80 cents out of every dollar on care for their customers, the law requires them to refund the excess.
As a result of the review process, federal officials say, rates were reduced, on average, by nearly 3 percentage points, according to a report issued in September.