Modest premium increases hurt Democrats’ midterm messaging

Health insurers are proposing relatively modest premium bumps for next year, despite doomsday predictions from Democrats that the Trump administration’s changes to ObamaCare would bring massive increases in 2019.

That could make it a challenge for Democrats looking to weaponize rising premiums heading into the midterm elections.

“It’s going to be very difficult to turn what’s happening with premiums into a talking point for Democratic candidates,” said Larry Levitt, senior vice president for health reform at the Kaiser Family Foundation. “These relatively modest increases in some cases seem to contradict the conventional wisdom that Republican efforts to undermine the law are driving premiums up. Both things are actually true.”

{mosads}While the new rates don’t take effect until Jan. 1, open enrollment begins Nov. 15 and customers will know about final rates in October. Rates still have to be approved by state regulators.

Insurers’ costs are expected to increase as a result of the repeal of the individual mandate, as well as the administration’s expansion of non-ObamaCare plans.

But several other factors at play mean premiums are unlikely to increase significantly in 2019.

“The fact that insurers are doing so well financially right now means they don’t need significant premiums increases in spite of the fact that repeal of the individual mandate penalty and expansion of short term plans will drive up their costs,” Levitt said. “The strong insurer profits are pushing premiums down while individual mandate and expansion of short term plans are pushing premiums up.”

As a result, states are reporting modest rate increases for next year. Eight states say the average proposed rate increase is below 10 percent, and five states say average rates will exceed 10 percent.

Experts say it’s likely that premiums would be declining, or at least not increasing, if the Trump administration and GOP-controlled Congress hadn’t made changes to ObamaCare.

“I think it’s arguable that in a lot of cases, we would be seeing rate decreases or flat rates if it were not for some of the other changes that have been making the marketplaces less stable and more challenging for insurers,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms.

Another reason premiums are unlikely to spike next year is because they’re already so high. Insurers overpriced their plans this year, driven by the uncertainty over how the Trump administration would handle ObamaCare.

Insurers considered policy changes that hadn’t happened yet — like the repeal of the individual mandate — when pricing their plans, leading to double digit premium increases for 2018. That means many insurers don’t need to raise rates by much for 2019.

David Anderson, a research associate at the Margolis Center for Health Policy at Duke University, said if insurers had priced premiums perfectly this year, he would have expected increases of 20 percent for 2019. Instead, he expects rate hikes around 8 percent.

“If they were going to be wrong on rates, they had every incentive in the world to be wrong high,” Anderson said.

For example, ObamaCare insurers in Pennsylvania had average premium increases of 30 percent for 2018. Now they’re asking state regulators to approve average increases of less than 1 percent for next year.

State governments have also been taking actions to curb rising health insurance premiums.

Several states have applied for federal funds that would help them mitigate expenses tied to high-cost enrollees on ObamaCare insurers, potentially reducing premiums for customers.

Maine, Maryland, New Jersey and Wisconsin all have pending applications that could be approved this year.

Additionally, 12 insurers have announced they will expand their footprint in the markets this year, leading to more competition among insurers and potentially reducing premiums.