Finalized rates for big health insurance plans around the country show the magnitude of the challenge facing the Obama administration as it seeks to stabilize the insurance market under the Affordable Care Act in its remaining weeks in office.
Market leaders that are continuing to sell coverage through HealthCare.gov or a state equivalent have been granted average premium increases of 30% or more in Alabama, Delaware, Hawaii, Kansas, Mississippi and Texas, according to information published by state regulators and on a federal site designed to highlight rate increases of 10% or more.
In states including Arizona, Illinois, Montana, Oklahoma, Pennsylvania and Tennessee, the approved rate increases for the market leader top 50%. In New Mexico, the Blue Cross Blue Shield plan agreed to resume selling plans through the online exchanges after sitting out last year, but has been allowed to increase rates 93% on their 2015 level.
Dominant insurers in Connecticut, Georgia, Indiana, Kentucky, Maine, Maryland and Oregon have been allowed to raise premiums by 20% or more, and rate increases from similarly situated carriers in Colorado, Florida and Idaho are brushing up against that threshold.
Most of the 10 million people who currently get coverage through an insurance exchange such as HealthCare.gov don't pay the full premiums because they receive subsidies from the federal government that are pegged to insurance prices in their area. As many as nine million people currently buy individual coverage without using the site, but at similar prices, and most of them aren't eligible for subsidies.
The Obama administration has characterized the year as one of "transition," in part because insurers priced aggressively low in the opening enrollment periods for coverage under the law, and has pledged new efforts to encourage healthier people to sign up.
Federal officials plan to focus much of their outreach campaign this year on people who qualify for the subsidies toward the cost of their coverage.
"Headline rates do not reflect what most consumers actually pay," said Marjorie Connolly, a spokeswoman for the Department of Health and Human Services. "Eighty-five percent of Marketplace consumers receive tax credits, and this year, most HealthCare.gov consumers will again have the option to select a plan for less than $75 per month."
But in all, the premiums offer the clearest portrait yet of health plans' assessment of the stability of the individual insurance market on the eve of the fourth, critical, sign-up window for the law.
"The situation is serious," said Alissa Fox, senior vice president of the Office of Policy and Representation for the Blue Cross Blue Shield Association. "The reason the premiums are where they are is that the people we are covering have serious conditions and they're using a lot of medical services because of their chronic illnesses. That's clear. And there's not enough young, healthy people to balance out those costs."
The premium increases have also inspired lawmakers from both political parties to talk about the need to change the law, though they don't agree on how.
In Minnesota, for example, Blue Cross Blue Shield is pulling its preferred provider organization plans from the state's online exchange, MNSure, and the narrow network product has been approved for an average rate increase of 55%.
Democratic Gov. Mark Dayton told local reporters that the law is "become unaffordable for many Minnesotans, a growing number with these rate hikes" and that federal and state action is necessary.
House Speaker Paul Ryan, a Wisconsin Republican, has gone further and said the insurance markets are already in a "death spiral,'" and that "we're going to have to change this thing."
Insurers had warned of a turbulent year as they came to terms with the impact of sicker people rushing forward to buy insurance under new rules that required them to accept all buyers regardless of their medical history. A number of popular plans have folded, such as the "cooperative" startups funded by the law, sparking an exodus of their members onto the remaining insurers.
The danger for insurers and supporters of the law now is that high prices and limited choices further deter low-risk people from signing up, and that the increases continue and become irreversible.