Republicans were quick to pounce Monday on Florida’s announcement that residents buying health insurance on the individual market for next year will face a 13.2 percent average increase in monthly premiums — one of the steepest rate hikes announced for any state. “Obamacare is a bad law that just seems to be getting worse,” said Florida Gov. Rick Scott, a Republican who is running for re-election.
But consumer advocates and Sen. Bill Nelson, D-Fla., the state’s former insurance commissioner, blame the increases on Florida lawmakers’ decision last year to suspend the state’s authority to negotiate and approve premiums on policies sold to people who buy insurance themselves instead of getting it through an employer.
The Republican-controlled Florida legislature voted to cancel that authority until 2016 because it did not want to have any involvement with insurance plans sold through the Affordable Care Act, saying that job should be done by the Obama administration. The federal government has authority to review but not change insurance rates.
Most health experts agree that state regulation of insurance rates helps hold down premiums. According to the National Conference of State Legislatures, about two dozen states empower regulators to approve or disapprove insurance premium changes, although the power varies widely.
A report by the Kaiser Family Foundation in 2012 found that one out of every five insurer’s requests for higher rates submitted to states in 2011 resulted in a lower rate increase or no increase at all. On average, approved rate increases were 1.4 percentage points lower than what insurers initially requested, a reduction of about one-fifth.
For instance, state rate review led to lower rates being approved in Oregon on Friday.
After Oregon regulators reviewed insurers’ rate requests this summer, several of the largest proposed rate increases were scaled back. Regulators said the insurers could not justify the higher rates, and had failed to take into account the dramatic drop in uninsured as a result of the health law’s expansion of coverage. Fewer uninsured means providers will pass on lower uncompensated care costs to insurance policyholders, state officials said.
PacificSource, which initially proposed a 15.9 percent increase — will raise rates by 3.9 percent. Moda’s proposed 12.5 percent increase will be cut back to 10.6 percent.
Oregon is one of the few states so far where the average premium rates for policies sold in the online marketplace are declining compared to 2014 rates. Most of the 15 states that have released 2015 rate information are seeing single-digit increases.
That’s much less than Republicans have been predicting and lower than the double digit rate increases that have been common in the individual market for at least the past decade. These rates do not affect people who are covered through their employer.
“Our rate review program does seem to be correlated with lower rates,” said Jesse Ellis O’Brien, health care advocate for the Oregon State Public Interest Research Group, an advocacy group.
In Connecticut, regulators last week rejected a 12.5 percent proposed rates hike by Anthem Blue Cross and Blue Shield and asked the carrier to submit new rate proposal. The state also turned down a request by ConnectiCare Benefits Inc. to raise rates by an average of 12.8 percent, but approved a 3.1 percent average increase.
Sabrina Corlette, a senior research fellow at Georgetown University, said Florida’s rate increase for next year can be tied, to some degree, to lawmakers eliminating authority to review rates.
“It’s really important to have a third party overlook these numbers,” she said. “Rate review makes a difference.”
The Obama administration in 2011 said it would require insurers seeking more than a 10 percent annual increase to submit those rates to the federal government with justifications. The administration put those rate hikes on a website, which has not been updated since May. A spokesman for the Centers for Medicare & Medicaid Services said the site would be updated “shortly.”
But Corlette said the “public shaming” was unlikely to have much impact because the administration has done little to promote the site and few consumers are aware of it.
Tasha Bradley, a spokesman for the U.S. Department of Health and Human Services, said after tax credits are figured in, the average premium for Florida residents this year was $50 for a silver plan, the most popular plan type on the marketplace.
Greg Mellowe, policy director for consumer advocacy group Florida Chain, said the state’s failure to do rate review harms consumers. “A transparent and accountable rate review process is the best protection for consumers, as we see in Oregon,” he said. “So we don’t yet know how much the Legislature’s actions hurt consumers, but what we do know for certain is that they didn’t help them.”
Nelson expressed a similar view. “The state is not doing its job to protect consumers from health insurance rate hikes,” he said in a statement.
Florida will have 14 companies selling health plans next year on its individual market, including three companies that did not participate on the exchange last year.
Of the 11 returning plans, eight filed average rate increases ranging from 11 percent to 23 percent, and three filed rate decreases ranging from 5 percent to 12 percent. The 13.2 percent average increase is one of the largest among the more than 15 states that have released rates. California officials said Friday that rates would increase about 4 percent on average next year.
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