Obamacare has largely been out of the news cycle for a couple of months, but that is about to change as we head towards the 2014 election. Here are some of the things we can expect to see in the news.
Modest 2015 Rate Increases
The 2015 rate increases were largely modest. Does that prove Obamacare is sustainable? No. My previous prediction was for increases of 9.9 percent.
With almost no valid claims data yet and the “3Rs” Obamacare reinsurance program (risk adjustment, reinsurance, and risk corridors), insurers have little if any useful information on which to base 2015 rates, and the reinsurance program protects the carrier from losing money through 2016.
We won’t know what the real Obamacare rates will be until we see the 2017 rates––when there will be plenty of valid claim data and the Obamacare reinsurance program, now keeping rates low, will have ended.
This fall’s 2015 Obamacare open-enrollment will likely be very problematic. The HealthCare.gov backend is not built yet––a year and counting after it should have been.
How many people are enrolled in Obamacare? Without the backend accounting system, no one knows.
Auto-Enrollment Surprises Likely
The administration says it is going to auto-renew existing Obamacare policyholders. But while the administration tells policyholders their automatic renewal will go smoothly, every one of these subsidy-eligible people needs to go to the exchange website and reenroll.
The biggest reason is in most cases the baseline second-lowest-cost Silver plan has changed and with it the subsidy they are eligible for. The only way a participant will know the impact of this is to reenroll. If not, they could be surprised by a big jump in their 2015 out-of-pocket premium come January, or a big tax bill a year later.
Actuarial firm Milliman put the impact of Silver baseline plan changes this way in a recent issue brief: “Even modest premium increases by market leaders of 5% could lead to materially higher net premium contribution increases of 30% to near 100% for low income [subsidy-eligible] enrollees during 2015.”
Milliman also pointed out, “If consumers choose to auto-enroll because of the simple process versus evaluating their options by going to the federal exchange, individuals who auto-enroll may have unexpected materially higher net premium contributions relative to payments in 2014 for the same plan.”
In September the Kaiser Family Foundation released a report stating average premiums will decline slightly for the Silver baseline plans in 16 markets. That conclusion could be incredibly misleading. The new 2015 Silver baseline plan may have a lower premium than the 2014 Silver baseline plan. But that is almost always because the insurance company that held that slot in 2014, and almost always got the largest share of business, significantly increased its rates for 2015.
Then another insurance company, which didn’t write much business and is eager to increase market share, decreased its rates and has become the 2015 baseline plan. The second company was able to decrease its rates without much fear because the Obamacare “3Rs” reinsurance scheme protects them from losses.
Although open enrollment is not scheduled to begin until 11 days after the November election, there will be plenty of renewal and cancellation letters going out in October, including many pre-Obamacare policies being cancelled this year now that their one-year extension is up.
Does this all sound confusing? Just wait until we approach the next open enrollment, with millions of people hearing about all of this complexity and having just four weeks to get their enrollment validated for January 1. The Obamacare anxiety index is going to be off the charts well before November 15.
Add to all of this bigger deductibles for 2015 (those go up with cost trend as well as the rates) and more narrow networks in addition to generally larger rate increases for the plans that got the most enrollment, and there will be lots to talk about.
The last couple of months have been very quiet for Obamacare. That is about to end.
Robert Laszewski is a contributing editor to Health Care News and a nationally recognized health insurance expert. He runs the Health Care Policy and Marketplace Review blog, where an earlier version of this column originally appeared. Reprinted with permission.