Washington State Insurance Premiums to Increase by 13 Percent

Published July 5, 2016

Thirteen health insurance companies in Washington State are seeking government approval for premium increases, which would go into effect in 2017, averaging 13.5 percent for individual health plans sold on or off of Washington Healthplanfinder, the state’s Obamacare exchange.

The requested increase for 2017 is more than triple the 2016 requested average increase of 4.2 percent.

The latest requested rate hikes range from 7.4 percent for Coordinated Care to 20 percent for Premera Blue Cross, according to numbers released by state Insurance Commissioner Mike Kreidler on May 16.

Premera lost $117 million in the state health care exchange in 2015, spending $72 million on administrative costs and charging $45 million less for premiums than the cost of claims submitted by its base of 101,000 enrollees, according to Premera’s summary of its rate request. The company had previously requested rate increases of 9.6 percent for 2016 plans and 8.1 percent for 2015.

The Office of the Insurance Commissioner is expected to finish reviewing all plans by mid-July, and the Health Benefit Exchange Board will certify all plans to be offered on Washington Healthplanfinder on September 8, Kreidler’s office stated on May 16.

‘Stab in the Dark’

Roger Stark, a health care analyst at the Washington Policy Center, says insurers are raising their prices now because they underestimated in 2013 how expensive insuring individuals under the Affordable Care Act (ACA) would be.

“When the insurance carriers were forming their plans and their price structure, they had no way of knowing where those plans should be priced, so they took a stab in the dark,” Stark said. “They’re realizing they’re totally upside-down now.”

Stark called the underlying reasons for the present surge in premium prices “absolutely predictable.”

“It’s basically adverse selection,” Stark said. “It was pretty clear that the young and healthy were going to pay the penalty, pay the tax, and opt out of having insurance, and the older, sicker individuals were going to go ahead and purchase insurance.”

Back to the Future

Jami Lund, a senior policy analyst at the Freedom Foundation, says the Washington State government tried and failed in the 1990s to implement provisions similar to those later incorporated into Obamacare, such as excluding preexisting conditions, limiting health care premiums while increasing costs, and mandating managed care.

“The Health Services Act of 1993 was adopted [in Olympia] in an ambitious attempt to precede the country on these kinds of issues,” Lund said. “Our state repealed a series of very similar mandates in 1995, seeing them as a mistake. That’s unique to Washington, that we narrowly avoided these kinds of problems in the 1990s, only to repeat them now.”

Ideology can interfere with people’s ability to judge government-centered programs on their merits, Lund said.

“One of the problems with these government-managed policies is that those who are setting the policy are sort of utopian, and they want it to seem to work well, so they use flattering estimates of what’s going to be available, how much it’s going to cost, and how it’s going to keep everything working fine,” Lund said. “They ignore the invisible hand [of the market] at their peril.”

Awaiting DC Solution

Stark says Congress’ imposition of mandatory coverage standards for ACA-compliant plans is forcing Washington and other states to wait on Washington, DC for new health care reforms.

“With all the benefit mandates baked into plans, it’s really tough for the carriers to offer a truly competitive array of plans for individuals here in our state,” Stark said. “I really don’t see much we can do here on a state level.”

State Sen. Barbara Bailey (R-Oak Harbor) says she is concerned federal lawmakers’ solutions to the ACA’s shortcomings will exacerbate them.

“I believe this was always intended to be the precursor to a single-payer system on a national level,” Bailey said. “I believe it ultimately will take a complete failing of our system to reinvent it the way it needs to be in a consumer-driven system.”

Lund says there’s a chance federal lawmakers could learn from the failed ACA experiment.

“Even the Soviet Union gave up on government-planned and -managed sectors and segments of the economy,” Lund said.

Ben Johnson ([email protected]) writes from Stockport, Ohio.

Internet Info:

“Rate Request Filing for Premera Blue Cross in Washington State,” Washington State Office of the Insurance Commissioner, May 16, 2016: https://heartland.org/policy-documents/rate-request-filing-premera-blue-cross-washington-state

“Washington State’s Individual Market as of 2016,” Washington State Office of the Insurance Commissioner, May 16, 2016: https://heartland.org/policy-documents/washington-states-individual-market-2016

Image via Thinkstock