The Times reports that insurers are finding that their risk pools are sicker than expected, and new customers are using more services than expected. As a result, they are requesting a rate increase from the federal government–increases that need to be justified.
Hoping to avoid another political uproar over theAffordable Care Act, the Obama administration is trying to persuade states to cut back big rate increases requested by many health insurance companies for 2016.
In calling for aggressive regulation of rates, federal officials are setting up a potential clash with insurers. Some carriers said they paid out more in claims than they collected in premiums last year, so they lost money on policies sold in the new public marketplaces. After finding that new customers were sicker than expected, some health plans have sought increases of 10 percent to 40 percent or more.
Administration officials have political and financial reasons for wanting to hold down premiums. Big rate increases could undermine public support for the health care law, provide ammunition to Republican critics of the measure and increase costs for some consumers and the federal government.
Last week, I was at a workshop at SEALS about the ACA, and the question was posed whether the ACA was a landmark statute. Recall that Justice Scalia snidely compared it to the Wagner Act in his King dissent. My answer was emphatically no. It is indisputable that about 15 million people have benefited from the ACA. But what about everyone else? If this law continues to raise costs and make insurance significantly worse off for the other 200 million Americans, then its landmark status is in severe doubt. Unlike social security, which benefits everyone when they hit 65, and imposes a discreet tax on paychecks for youths, the ACA will only benefit a certain class of people–those who are poor and those are sick. I explained at the workgroup that if the premiums keep increasing, and employers throw their employees off plans once the Cadillac Tax kicks in, there will be a sustained effort to significantly change the law. No, that doesn’t mean repeal the entire ACA. But people will have an appetite to revise is to that the overwhelming majority of Americans are not made materially worse off. I don’t think the ACA has, as the President has explained, changed the American culture so that we all want to take care of everyone else, and make health insurance a fundamental right. To the contrary. The law was sold on the (unkeepable) promises that it would make insurance more affordable for everyone, without raising any premiums. (Remember bending the cost curve?).
The ACA is not a super statute. The Chief Justice made clear that court cases will not gut the law. But the political process remains ready, and able to do so.