Premiums projected to increase by double-digit again in 2019. The only visible actions we see on healthcare premiums is to cast blame.

The headlines about premium increases are not getting the attention that the they produced just 2 years ago. Why is that? Projections across the country are for premiums for Exchange Plans will increase by 8-10% in the West to 19% to 59% in the East. Our minimal math skills tell us that these increases are not good but when compounded on previous increases then premiums reach staggering levels.

Why are Insurers increasing these premiums? Data which we’ll discuss below reflect 2017 as the best year for insurers since they signed on to the Exchanges.

But the blame game is in full swing and that may be partly why the headlines don’t command the attention they did in previous years. The American people are a lot smarter about these news stories than most politician give them credit. When citizens see Insurers cast blame and politicians cast blame and no one doing anything to help; they become skeptical if not down right cynical about the news. That cynicism is something with which I can relate.

The biggest “excuse” and most “blame” is that the Trump administration has refused to make the subsidy payments to insurers that the Obama administration had made in prior years. Remember those subsidy payments? The ones that allow members below certain income levels to pay little or no premium as well as lower the out-of-pocket cost for members. The burden of these payments was not authorized by Congress, say the GOP folks, plus the original ACA called for states to be weaned off Federal subsidies.

But now the bill comes due and everyone has their hands in their pockets as they pass the check around the table to see who will bite. Reminds me of a friend of mine.

Let’s talk about the insurers which are crying poverty. They state that the ACA requires them to accept all enrollees without consideration of current or past health status and cover any pre-existing health issues. In 2014, this was a valid concern. No one could accurately project what the cost of guarantee coverage with no pre-existing waivers would be, without a crystal ball. But, the Insurers sold policies, paid claims that were probably astonishing, received their subsidy payments then raised premiums again and again, anyway.

Now Insurers are looking at year 5 of the ACA. Insurers have increased premiums several hundred percent over the past 7 years and while their membership count maybe the same or even lower overall their revenues are much higher.

A recent article by the Kaiser Family Foundation included excellent analysis finding that Insurers in 2017 had their best financial year selling individual market health insurance since the Affordable Care Act began requiring guaranteed access to coverage for people with pre-existing conditions in 2014.

This analysis finds insurers posted their strongest performance in the individual market using two different financial indicators:

  • The average share of health premiums paid out in claims (or medical loss ratio) fell to 82 percent in 2017 from 96 percent in 2016 and 103 percent in 2015.
  • Average premiums collected in excess of claims (or gross margins) reached $79 in 2017 per member per month, up from $14 in 2016 and -$9 in 2015.

One can look at the reports by many Insurers that show enrollment down, some by as much as 40%, yet revenues have sky rocketed. Can you imagine if your business serviced 40% fewer clients but your revenues were higher than ever? Hard to digest isn’t it?

Anyway, the point is that the press can see that putting the “Premiums to increase dramatically” stories on Page One no longer compete with the other stories of the day. And I don’t even want to get started on what the other news is that they focuses upon, give me a break.

If you’re on a group plan sponsored by your employer you’ll be better off than if you were on your own. If your employer provides an HRA to tie with your group plan you will be in great shape. With employment numbers soaring it means that more people could be covered by employer sponsored plans. That’s good.

I hate the frog in the hot water analogy but that’s a bit of what we have here. Next week we’ll discuss the efforts by 19 state’s Attorneys General to void the “No pre-ex” portion of the ACA with actions that state “if the individual mandate is out then the no pre-ex is gone” which presents an interesting argument. Can’t wait.

These are confusing political times but we must remain committed because we are all in this together.

Until Next week.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s


%d bloggers like this: