Navigator John Jones explains the many options to a client seeking help buying health insurance at the Family Guidance Center in Springfield, Ill.
The wild hikes in health insurance rates that blindsided many Americans in recent years may become less frequent because of the health care overhaul.
Final rates for 2015 won’t be out for months, but early filings from insurers suggest price increases of 10 percent or more. That may sound like a lot, but rates have risen as much as 20 or 30 percent in recent years.
The rates that emerge over the next few months for 2015 will carry considerable political weight, since they will come out before Republicans and Democrats settle their fight for Congressional control in next fall’s midterm elections. Republicans are vowing to make failures of the law a main theme of their election push, and abnormally high premiums might bolster their argument.
In addition to insuring millions of uninsured people, the other great promise of the massive health care overhaul was to tame the rate hikes that had become commonplace in the market for individual insurance coverage.
No one expects price increases to go away, but some nonpartisan industry watchers say they do expect the big hikes to hit less frequently in the years to come, even though it’s still early in the law’s implementation. They point to competition and greater scrutiny fostered by the law as key factors.
Public insurance exchanges that debuted last fall and were created by the law make it easier for customers to compare prices. The overhaul also prevents insurers from rejecting customers because of their health.
That means someone who develops a health condition like high blood pressure isn’t stuck in the same plan year after year because other insurers won’t take her. She can now shop around.
The Urban Institute, a nonpartisan policy research organization, said in a recent report that competition will help restrain individual insurance prices next year.
And it could have a lasting impact once the new markets for coverage stabilize in a few years, said Larry Levitt, an insurance expert with the Kaiser Family Foundation, which analyzes health policy issues.
“Now if a plan tries to raise premiums a lot, people can vote with their feet and move to another plan,” Levitt said.
Greater scrutiny by regulators could also keep rates from skyrocketing. The overhaul requires a mandatory review of rate increases larger than 10 percent, which can lead to public attention that insurers don’t want.
“Nobody’s going to get a rate increase unless they truly deserve it,” said Dave Axene, a fellow of the Society of Actuaries, who is working with insurers in several states to figure out pricing. “The rigor that we had to go through to prove that the rates were reasonable, it’s worse than an IRS audit at times.”
To be sure, insurers and others in the field say it’s too early to fully understand what pricing trends will emerge for individual insurance plans, which make up a small slice of the insured population. And some experts aren’t convinced of any one outcome of the law.
Industry consultant Bob Laszewski called the idea that the exchanges will reign in prices by promoting competition an “unproven theory.”
“No one has any idea what this risk really looks like yet and probably won’t for two to three years,” he said.
Karen Ignagni agrees. The CEO of the trade association America’s Health Insurance Plans, which represents insurers, said competition between insurers will mean little if too many sick people sign up for coverage on the exchanges. Insurers need a balance between sick and healthy people to avoid big claim hits that lead to future rate hikes.
Laszewski expects some plans to seek either big premium increases or decreases in 2015, but he says that says nothing about the long-term implications of the overhaul. He noted that insurers entered 2014 without a good feel for what their competitors would charge, so price swings are inevitable as companies adjust.
Charmaine Piquette, 60, said she’s “petrified” of a big increase for next year. “I finally feel like in my life I have a break and can afford to take care of myself even though I’m not living on very much a month,” said Piquette, who lives outside Milwaukee.
Piquette used Wisconsin’s public health insurance exchange in March to get coverage from the nonprofit insurance cooperative Common Ground. The plan costs her only about $177 a month thanks to a $500 tax credit she receives as part of the overhaul.
She lives mainly on about $1,200 a month in Social Security disability payments, but her health coverage helps her afford things like visits with a diabetes counselor to get her blood sugar back under control.
“I said, ‘Praise the Lord’ every single time I use this,” she said.