Obamacare insurers have submitted their rate requests in New York and the average increase next year is 16.6 percent. From Bloomberg:
Insurers are seeking to boost their premiums 16.6 percent on average for 2018, the state Department of Financial Services said Wednesday. While that’s not as high as the 18 percent hike they requested last year, it’s still a substantial increase in cost for New Yorkers who don’t get help from subsidies under Obamacare…
The state provided little information on what’s behind the increases, and the insurers’ filings weren’t immediately available online. But insurers and regulators in other states have laid the blame for some of their premium increases on uncertainty from Washington.
It is true that insurers in other states have blamed a significant portion of their rate requests on uncertainty, particularly the uncertainty about whether or not the Trump administration will continue to make cost-sharing reduction (CSR) payments. Those payments, which amount to several billion dollars a year, are paid to insurers to reimburse them for helping to cover costs for low-income enrollees. Without them, insurers would need to add an additional 15% to their rate requests to cover those costs.
However, it appears that is not the case in New York. Charles Gaba at ACA Signups notes that there are two reasons why the double-digit rate hikes in New York can’t be blamed on uncertainty about cost-sharing payments. First, insurers were told to assume the payments would continue to be made. This memo from the state to insurers says [emphasis added], “For the purposes of calculating 2018 health insurance premiums for the individual and small group markets, insurers should assume that there will be no changes to the ACA.” In other words, don’t add a fudge factor to account for the possible loss of cost-sharing payments.
Secondly, Gaba points out that New York is one of two states (Minnesota is the other) that offer a basic health plan for low-income people. That plan absorbs most of the people who would be receiving cost-sharing benefits. As a result, “in 2016, 57.3% of exchange enrollees received CSR assistance nationally but only 16% in Minnesota and 18% in New York did.” So even if cost-sharing payments were cut, it would have a much smaller impact in New York than in most states.
What all of this means is that the 16.6% average increase in New York is not the result of concerns we’ve seen raised by other insurers. One New York insurer, Care Connect, requested a 30% increase on individual plans next year. It justified the request this way: “The requested rate increase for individual plans is part of a continuing correction and is an unavoidable response to this population’s unexpectedly large and continuing need for medical care.” That mention of a “continuing correction” is significant. Last year, when rates jumped 22% nationwide, Obamacare supporters referred to it as a one-time adjustment. But it’s not quite working out that way.
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