Risk pool, drug prices to shape insurers' 2016 rates

The more insurers submit proposed rates for 2016 Affordable Care Act health plans, the more it becomes clear that rates could rise significantly, Politico reported.

Today marks the deadline for insurers to publish--and explain--proposed rate hikes in excess of 10 percent, the article noted. Insurers have put a number of sharp increases on the table, FierceHealthPayer previously reported, including Blue Cross and Blue Shield of New Mexico (51 percent) and BlueCross BlueShield of Tennessee (36 percent). Meanwhile, Oregon's Moda Health Plan has proposed a 25 percent hike, Politico noted.

Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation, told Politico that insurers have a few reasons for increasing rates.

As insurers enter the third year of open enrollment, they know more about the health status and usage patterns of new enrollees, Levitt told Politico. The low individual mandate penalty has led many healthy Americans without insurance to stay that way, which means that those who have signed up for ACA plans tend to have unmet medical needs, FierceHealthPayer previously reported.

Conversely, the phasing out of payments to insurers under the risk corridor program caused market uncertainty and motivated insurers to take a cautious approach to pricing, Levitt said.

Finally, rising drug prices continue to pressure payers, especially when it comes to specialty drugs.

More than three dozen states have the authority to approve or reject insurers' proposed rates, so the final rate increases are likely to come down, Politico said.

At the same time, Seth Chandler, an expert in insurance law at the University of Houston, told Politico that most healthcare consumers prefer to "stick" to a health plan, even if premiums do increase, than search for a new plan and new doctors. As a result, insurers can raise rates without the fear of losing too many customers, Chandler said.

For more:
here's the Politico article

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