2018 Health Insurance Rates

congress-74032_1280If you have not heard, you soon will.  The members of the media and liberal politicians seem to take every chance they get to spread scary rumors so they can frighten the American public.  The only way to protect yourself is to know how things work.

Under the current law, insurance companies are required to present their anticipated premiums for the following year to the Department of Health & Human Services for review in June.  Please note that in spite of all the scary warnings you are going to hear, these “filings” are just the start of a conversation.

Like in any negotiation the first “offer” is always higher than expected In addition, regardless of what the stated premium will be, if it is unacceptable, HHS will tell the insurance companies who can then make adjustments.  The premiums that you and I will pay will not be official until November 1.

Federal Consequences

HHS can only act if, in their opinion, the anticipated rate is 10% higher than the previous year.  Then, and only then, can they require the insurance company to place an explanation for the premium increase on the insurance company’s website and withhold permission for an insurance company to participate in the Federal Marketplace if, in the opinion, HHS and the insurance company fail to negotiate a satisfactory compromise.

Under current law, HHS does not have the power to tell a private company what premium they must charge.  (However you do.  If the premium they offer is too high, in your opinion, simply buy your health insurance from someone else.)

State Consequences
In addition to HHS approval health insurance companies are required to present their anticipated rates, for the following year to State Departments of Insurance.  This will happen sometime later this year.  The State Departments of Insurance have a greater ability to “force” insurance companies to adjust their rates.  Unlike HHS who only can require a justification be placed on a company’s website, individual state Departments of Insurance have the authority to prevent an insurance company from conducting business in a specific state.  (Please note that the threat of non-participation in the federal Marketplace is not limited to HHS.  States also have the authority to tell health insurance companies, “You are not welcome here” if they raise their rates too high.
Many state Departments of Insurance have already either given health insurance companies more time to wait and see what congress is going to do about Obamacare or allowed health insurance companies to file multiple rate proposals pending the outcome of debate over the future of Obamacare in D.C.

Rather than blaming “greedy insurance executives” it would be a better use of one’s time to remember that state insurance laws, that were in place before the Affordable Care Act, do not allow an insurance company to continue to operate in a deficit.  They are required, by existing state law, to set their premiums high enough to pay all of the anticipated medical bills they will get in the following year.

As doctors, hospitals and pharmacies continue to raise rates, health insurance companies must continue to raise premiums in order to remain compliant with State, as opposed to Federal, laws.  (So often people forget that insurance companies must remain in compliance with two sets of laws and not just Obamacare.)

2018 First Premium Signs
It is easy for someone to be frightened over the premiums that have been presented to HHS if they do not consider all of the facts.
The preliminary rates that have been presented to HHS, so far this month, reflect the uncertainty of what is going to happen, in congress, with health insurance.  The first rates that have been presented to HHS show increases of anywhere from 6.7% in Vermont to 58.8% in Maryland.  I anticipate that these figures will be used to frighten people.

Remain calm and remember that we do not know what variables are required in each state above what is required by the ACA.  In addition, these figures only represent the start of a conversation.

(It might be helpful to remember a little bit of Obamacare history.  In 2013, the first year of Obamacare Annual Open Enrollments, Aetna proposed a specific rate in Maryland.  They were told that they would have to lower their premium and operate in a deficit for the year.  Aetna pulled completely out of Maryland.)

I feel the need to emphasize that THESE ARE NOT THE FINAL PREMIUMS.  The premiums that were given to HHS are just the start of negotiations for 2018 premiums

If anything, this exposes the lack of logic behind the ACA.  Not only does the ACA fail to restrict the fees hospitals and doctors can charge for their services, it attempts to place federal regulations on private companies.

Since neither doctors, hospitals or insurance companies were nationalized, they are free to set their own prices.  If the government does not like what they do, they are free to stop offering their services.
So far health insurance companies have voluntarily “played ball” with the new federal regulations, but their patience with the government has got to be running thin.
People forget that health insurance companies are not charitable institutions.  They were created to make a profit.  If the government regulations will not allow them to provide a service and still make a profit, they will simply close their doors and lay off their employees.
Each year more insurance companies elect not to offer health insurance in the individual marketplace because they feel that they are unable to make a profit by serving individual.
Of the 22 insurance companies that were formed by the ACA, 17 have already stopped operating.

If Obamacare is not adjusted, there is a good chance that in the next few years the nation will have an acceptable law for the liberals, but no insurance option for the self-employed and those who work for companies that do not provide health insurance.

The Group health insurance market appears to have stabilized but the Individual health insurance marketplace, that is tied to the Federal Marketplace, has not.