Affordable Care Act grandfathering driving costs up, Blues say

The Obama administration's decision last fall to let consumers keep certain plans that weren't compliant with the Affordable Care Act may have led to some insurers proposing higher premiums for 2015, Politico reported.

Although the average rate increase is 7.5 percent, as FierceHealthPayer previously reported, insurers in states like Florida, North Carolina and Iowa are requesting hikes between 11 percent and almost 18 percent. They claim that many young adults opted to remain with their existing transitional policies health plans, driving prices higher to cover costs for older, sicker consumers.

For Blue Cross Blue Shield of North Carolina, the Obama administration's decision is "definitely" driving up 2015 exchange plan rates, Barbara Morales Burke, the insurer's vice president of health policy, told Politico. That's because of the 234,000 members with the option to keep their original plan, a "very large share" did so.

She hinted, however, that the rate hikes might not be a permanent trend. "It's a one-time adjustment for what we didn't assume and couldn't have assumed last year before we knew transitional plans were going to be a possibility," Burke added.

And in Florida, the largest insurer--Florida Blue--said most of its 300,000 members with stayed enrolled in their transitional policies. Florida Blue is now raising premiums by an average of 17.6 percent for its plans sold on health insurance exchanges. The transition policy "contributed to higher insurance rates" for 2015 plans, Florida Blue Paul Kluding told Politico.

Meanwhile, CoOportunity Health, a consumer oriented and operated plan in Iowa, has requested a 14 percent for its exchange plans. The increase is about twice the amount the insurer would have proposed if tens of thousands of people hadn't stayed with their existing health plan, said Cliff Gold, the company's chief operating officer.

"Generally, the pundits said the impact nationally wouldn't be that large because there aren't that many" transitional plans, he said. "But where there are a lot of them, it has a big effect, and it's brought bad risk onto the exchange."

To learn more:
- read the Politico article