The meaning behind Geisinger Health Plan's steep rate request

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When Geisinger's health plan requested a rate increase of 40 percent for 2017, the organization found itself in the middle of a highly politicized fracas over healthcare costs, the New York Times reports.

During the debate over the Affordable Care Act in 2010, President Barack Obama hailed Geisinger, a health system with deep roots in central and northeast Pennsylvania, as a model for healthcare reform given its early adoption of a value-based care model.

Yet Geisinger’s health plan has faced the same obstacles as other insurers in the ACA marketplaces--resulting in steep rate hike requests that are stoking anger across the country and among prominent figures such as presumptive GOP presidential nominee Donald Trump.

President and CEO David Feinberg, M.D., tells the Times that Geisinger was losing $30 million a year on exchange policies. That doesn’t mean, though, that Geisinger plans to follow in UnitedHealth’s footsteps and pull back from the individual market, he notes, as the company does not have shareholders to whom it must answer.

The company simply underestimated how much care its new customers would require and priced premiums too low in 2016, requiring a correction in 2017, Chief Actuary Kurt Wrobel says.

“We are going to be taking care of the people in this community one way or another. So it’s really important for this program to be financially stable and sustainable,” he tells the Times.

However, there is no guarantee that its request will be granted, as many insurance departments negotiate down rates before approving them--as the Obama administration has pointed out. Plus, many Americans who receive coverage through the ACA marketplaces receive subsidies to help them pay premiums.

To learn more:
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