From the Desk of Bob McNett….
Individual Health Insurance Policies May See Major Price Increases in 2016.
Indications coming from health insurance companies around the nation are that most states, including Oklahoma, may see major price increases in 2016 on individual, non-group health insurance policies.
While we have not seen any definite information, as of yet, as to what these rate increases will look like in Oklahoma, information available on www.ratereview.healthcare.gov show the increases requested by the health insurance carriers participating in the Health Insurance Marketplace (the federally sponsored on-line market for individual health insurance.) Blue Cross and Blue Shield of Oklahoma, the leading underwriter of individual health insurance in our state, has filed requests on some plans for increases between 22.64% to 43.95%.
One must keep in mind that these are REQUESTED increases and not APPROVED increases. The rates must be approved by governmental agencies, so final rates may be lower than those requested. We should have final, approved figures soon, though no projected date has been announced.
Nothing has been made really clear by Blue Cross, but from what I am reading, Blue Cross may also be making changes to their PPO networks to try to lower final costs for their individual customers. Some of their messages to brokers like myself in this regard are lacking in any type of detail, but open enrollment for 2016 begins on November 1 so we should be getting more details sooner rather than later.
However, two things that are quite clear are the two culprits that are causing premium increases for next year:
First, rates set for last year, 2014, look like they were underpriced. There were many people that had been uninsured or underinsured for years that enrolled for individual health insurance, many of whom were eligible for subsidies through the Health Insurance Marketplace, the on-line market sponsored by the federal government. Many of these folks, apparently, had big pent-up demand for health care services for such procedures as joint replacements, back surgeries, and other expensive treatments. The Affordable Care Act (ACA) forbids health insurance companies from denying coverage, offering coverage at a higher premium, or instituting pre-existing condition waiting periods due to health conditions. Therefore, many millions of dollars of claims were created by people with immediate health care needs that the insurers had to process and pay. Everyone knew this was coming, but health insurers, with no prior experience in this new system to guide them, underestimated their exposure in this regard.
Second, part of the Affordable Care Act set up re-insurance pools, where insurers participating in the Health Insurance Marketplace had to pay into a pool that would reimburse health carriers that enrolled larger-than-average unhealthy populations of insureds in the first few years of the law. From what I have read, these pools were underfunded by the law, and when this became evident, it was too late to go back and obtain additional funding because of procedural rules passed by Congress after the law was instituted. As a result, health insurers will get less from these pools to cover their losses, and must go back to their current insureds with premium increases to adequately fund these policies.
Stay tuned to this blog as I will be informing everyone as soon as I get more information, which should be very soon, I would hope.
***None of the above should be taken as tax or legal advice. For how various aspects of health insurance rules affect your individual situation, consult with your legal or tax professional.
Bob McNett
The McNett Agency
918 294 3712
1 866 497 7119 toll free
918 494 6725 fax