Fresh problems for Obamacare: The largest health insurer in Texas wants to raise its rates on individual policies by an average of nearly 60 percent, a new sign that President Barack Obama’s overhaul hasn’t solved the problem of price spikes.
Texas isn’t alone. Citing financial losses under the health care law, many insurers around the country are requesting bigger premium increases for 2017. That’s to account for lower-than-hoped enrollment, sicker-than-expected customers and problems with the government’s financial backstop for insurance markets.
The national picture will take weeks to fill in. With data available for about half the states, premium increases appear to be sharper, but there are also huge differences between states and among insurers. Health insurance is priced locally.
This is going to be a very big disrupter.
Kelly Fristoe, Wichita Falls insurance broker
Earlier this week, North Carolina’s largest insurer said it will seek an average increase of 18.8 percent.
A recent analysis of nine states by the consulting firm Avalere Health found that average premium increases for the most popular kind of plan ranged from 5 percent in Washington state to 44 percent in Vermont.
Blue Cross Blue Shield of Texas has about 603,000 individual policyholders and, unlike other insurers in the state, offers coverage in every county. In a recent filing with federal regulators, a summary of which is available on HealthCare.gov, the company said it is seeking increases averaging from 57.3 percent to 59.4 percent across its individual market plans.
In a statement, Blue Cross Blue Shield of Texas said its request is based on strong financial principles, science and data. “It’s also important to understand the magnitude of the losses … experienced in the individual retail market over the past two years,” the statement said. The company says it lost $592 million last year and $416 million in 2014.
Texas is the healthcare law’s third-largest market, after Florida and California. Texas state regulators said the insurer’s request is confidential and they can’t comment on it. However, Insurance Department spokesman Ben Gonzalez said the state can withdraw approval if the request doesn’t meet requirements and standards in Texas law.
Wichita Falls insurance broker Kelly Fristoe said the burden of premium increases will fall hardest on rural communities where Blue Cross Blue Shield is in many cases is the only option. Metropolitan areas like Houston, Dallas, and Austin attract more insurers.
“This is going to be a very big disrupter of the market,” said Fristoe. Some relatively healthy people “would probably be willing to roll the dice and take their chances” by dropping coverage, even if it means they might be fined.
The insurer cautioned that the average premiums filed with regulators don’t represent the true bottom line for individual consumers. Some people may find that even with a higher premium, the coverage remains a good value.
Regulators can request more information from the company, but the federal government can’t order Blue Cross Blue Shield of Texas to roll back the increases, said Larry Levitt, an expert on the healthcare law at the nonpartisan Kaiser Family Foundation.
“Given how much money [the company] lost, it’s likely that a substantial rate increase is merited,” Levitt said.