3 reasons insurers will likely request higher rates in 2016

Expect health plans to request higher rates in 2016. That was the message Kim Holland, director for state affairs with the Blue Cross and Blue Shield Association, delivered at a conference on Affordable Care Act insurance exchanges, according to Bloomberg.

Holland cited three reasons that insurers continue to incur higher costs even as they add members as a result of ACA enrollment and Medicaid expansion.

  • The individual mandate penalty was too low to encourage the uninsured to obtain coverage, especially if they were in good health. As a result, those who did sign up for plans on the ACA exchanges tended to have previously unmet medical needs, which cost insurers more, Holland said.
  • In addition, according to Bloomberg, funding gaps created by the risk corridor program have hurt insurers and will cause market uncertainty. As FierceHealthPayer previously reported, payers set competitive rates on the state exchanges for 2015, expecting risk corridor payments to cover their losses, only for Congress to change the payment structure.
  • Finally, market forces put "unrealistic pressure" on insurers, Holland said. Consumers, employers and elected officials all want broader networks and lower costs, while payers feel like pharmaceutical companies take advantage of them by setting unsustainable prices for specialty medications. That said, the nation's largest for-profit insurers reported strong results in the first quarter of 2015, showing that they are in good financial health in the post-ACA market.

Insurers were due to submit their 2016 rates by Friday, May 15. However, the Supreme Court won't issue a verdict in the King v. Burwell case until June, so insurers such as Aetna are submitting tentative rates to state regulators, with the understanding that they may need to revisit them after the Supreme Court decision. One analysis has suggested that a ruling that strikes down subsidies on Healthcare.gov will cause rates to spike as much as 47 percent in 2016.

For more:
- read the Bloomberg post

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