Photographer: Patrick T. Fallon/Bloomberg

Obamacare Rates Rise in New York, and So Does Political Risk

  • Health insurers ask to raise ACA premiums by 17.3% in 2017
  • Opponents of the law have criticized affordability of plans

The rates Americans pay for coverage through Obamacare are going up, as New York joins the list of states where insurers are seeking big increases in premiums under the program, adding risk for the law as the U.S. presidential election heats up.

New York’s health insurers are seeking to raise the amount that customers pay for individual Obamacare plans by an average of 17.3 percent for 2017. That’s alongside sharp increases in Florida, where insurers are looking for 17.7 percent more, and Washington State, where health plans are seeking a 13.5 percent increase from customers.

That sticker shock for Obamacare customers could spell trouble for the law and its supporters. Republicans have already criticized President Barack Obama’s signature domestic policy law for limiting consumers’ choices. They may increasingly point at the law’s costs to consumers, especially as the plans become less affordable for people who get small or no subsidies under the program.

“Obamacare is going to be a huge political issue,” Robert Laszewski, an industry consultant who runs Health Policy and Strategy Associates, said in an interview. “These premiums are getting crazy.” The situation hasn’t been helped as some insurers, like UnitedHealth Group Inc., pull out of the markets.

Limited Pushback

New York’s insurance regulator does have an option to push back -- like some other states, it can push the requested rate increases back down. Last year, insurers in the state requested a 10.4 percent increase for individual policies, on average, and were allowed to boost rates by 7.1 percent.

Yet many of New York’s insurers are losing money on their Obamacare policies, which may limit how harsh the state will be, lest companies pull out of the market entirely.

CareConnect, owned by the Northwell Health hospital system on Long Island, is asking for an increase of 29.2 percent on average. Chief Executive Officer Alan Murray said he doesn’t expect the state insurance regulator to cut his requested increase by much, since it reflects a much more complete understanding of how expensive it’ll be to care for customers.

“If these requests aren’t approved, you are going to see more carriers leaving the market,” he said in an interview. “CareConnect needs to make sure this individual business is sustainable. We can’t run a business that is losing money.”

More Increases

Oscar Insurance Corp., a closely held startup that lost about $105 million last year, is requesting to boost individual rates by 18.4 percent on average, while UnitedHealth is seeking to boost New York premiums by 45.6 percent -- the second-highest request in the state.

“Medical costs have gone up, government programs that helped cover our costs are ending, and our members needed more care than we expected,” Oscar said in a letter to the state explaining its request.

Rising medical costs and the end of government programs designed to support the Affordable Care Act’s new markets in their early years are contributing to about 10 to 12 percentage points of the premium increases in New York, according to Dave Dillon, an actuary at Lewis & Ellis who specializes in health insurance. A pause in a tax on health insurers for next year is holding down rates, and some insurers are also changing their networks of doctors and hospitals to limit costs, he said.

Insurers who sell to small groups of people, such as small businesses, are asking for an increase of 12 percent on average, the New York regulator said. Oxford Health, a unit of UnitedHealth, is seeking a boost of 12.9 percent in the small group market.

Last year, rates for individuals increased about 8 percent on average in states using the Federal healthcare.gov marketplace, according to the Department of Health & Human Services. Some individuals get government subsidies to help them afford coverage, cushioning the effect of rising costs.

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