As the cost of health insurance continues to rise, the fallout from such increases is becoming ever more evident in state-run exchanges established by the Affordable Care Act. Some states have announced insurance rate hikes for the coming year, while others have said they will shut down all or part of their exchanges as insurers contend with higher costs and lower enrollment than originally anticipated.
The Louisiana Department of Insurance said Friday that it would shutter its state health plan by the end of the year. Only 17,000 people out of Louisiana’s population of 4.6 million had enrolled in that plan, which was operating at a medical-loss ratio of 113 percent. That means for every dollar it earned in premiums, it paid $1.13 in expenses, Modern Healthcare reported. Louisiana’s federally run exchange has five other insurance companies offering plans.
In June, Hawaii, which ran its own marketplace, Hawaii Health Connector, announced it would switch to the federally run marketplace, Healthcare.gov. Enrollment had been too low, at close to 40,000 consumers, and it was unable to generate sufficient revenue to sustain itself. "The viability of state health insurance exchanges has been a challenge across the country," Hawaii Gov. David Ige said at the time, when Hawaii became the third state after Nevada and Oregon to transfer its state-run health exchange to the federal one.
Of the twelve states plus Washington, D.C. that run their own health care exchanges, about half of them have financial difficulties, and several states, including Minnesota, Colorado and Vermont, are considering shuttering their marketplaces and using the federal one instead, the Associated Press hasreported.
Other states have acknowledged that in order to compensate for these costs, premiums will have to increase.
State officials announced Monday that premiums for plans sold on California’s exchange would rise by an average of four percent, slightly less than the average rate increase expected by exchanges in other states. Covered California’s executive director, Peter Lee, hailed it as a victory and as proof that the Affordable Care Act, often nicknamed Obamacare, is working, the Los Angeles Daily News reported.
"The health plans know that if they price their products too high and consumers know it's too high, because it's an apples-to-apples comparison, they will not get enrollment," Lee told The Associated Press. About 1.3 million people buy health insurance through Covered California.
But not all states are experiencing the same relative success as California. Although an analysis by the Kaiser Family Foundation in June found that in 11 major cities, the cost of a “silver” plan—one tier of coverage that consumers can pick—would increase by 4.4 percent from 2015 to 2016, costs are still subject to change, and when broken down by city, the increase in premiums varies widely. Some health insurance companies have requested to increase their premiums by as much as 40 percent in 2016, although state or federal officials must approve those increases before they can go into effect.
In Portland, Oregon, for instance, premiums were slated to rise by 16.2 percent in 2016 over the previous year. In Burlington, Vermont, the increase was 9.2 percent. In New York City, it was just .5 percent. Kaiser’s analysis noted that consumers would have to carefully research their options and possibly switch plans or even health insurance carriers in order to avoid paying significantly more in monthly health insurance premiums.
