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Reform Update: News of Fla. premium rate hikes quickly turns political


By Paul Demko
Posted: August 8, 2014 - 3:30 pm ET
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On Monday, the Florida Office of Insurance Regulation announced that the average premium for health plans sold on the exchange would increase by 13.2% in 2015. And the state's largest insurer, Florida Blue, is planning an even steeper hike of 17.6%.

That seemingly gloomy news was immediately seized on by Republican Gov. Rick Scott, who faces a tough re-election campaign against Democratic challenger and former Gov. Charlie Crist, as evidence that the Affordable Care Act is failing. “Obamacare is a bad law that just seems to be getting worse,” Scott said in a written statement. “Florida families are going to be slammed with higher costs.”

But Florida's characterization of 2015 premiums generated Florida—a perennial battleground state, with one of this year's most closely watched gubernatorial contests—highlights the role that premiums are likely to play in the November elections.

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Similar political volleys over rates have occurred recently in California, Minnesota, and other states. But as the wildly different takes on Florida's 2015 premium landscape shows, the complexity of the issue means that politicians can often cherrypick the data that serves their political agenda.

The Obama administration pointed out that the second-cheapest silver plan in Florida—which is the benchmark by which federal subsidies will be calculated—actually declined by an average of 4%. That's a crucial metric because 91% of the roughly 1 million Floridians who signed up for exchange coverage in 2014 received subsidies, according to the CMS. By the administration's calculations, three-quarters of exchange customers live in areas where premiums for the second-cheapest silver plan will decrease in 2015.

For most voters, the rate issue still remains an abstraction. But it will hit home as insurance customers across the country—both inside and outside the exchanges—begin receiving notices about their 2015 premiums.

“It doesn't become kitchen-table conversation until people get that notice in their mailboxes,” said Sabrina Corlette, a senior research fellow at Georgetown University's Center on Health Insurance Reforms. “There are going to be people who get increases, and those are the people that we're going to hear from.”

In California, Insurance Commissioner Dave Jones called a news conference to frame the debate over premiums before the rates were even released. Jones proactively made the case that insurers were holding down premium hikes in 2015 to curry favor with voters. That's because the insurers are seeking to defeat a ballot initiative, strongly backed by Jones, that would give his office additional authority to regulate rate hikes.

“There would be a huge public outcry, and the public would respond at the ballot box,” Jones said during the news conference.

The day after Jones' news conference, it was announced that premiums would increase by a weighted average of just 4.2% in California for the 10 plans participating in the Cover California marketplace. Peter Lee, the exchange's executive director, denied the suggestion that insurers were manipulating rates to gain public favor ahead of the November referendum.

In Minnesota, Democratic-Farmer-Labor Party Gov. Mark Dayton has been criticized by Republicans for the state's failure to release 2015 premiums. In the absence of any hard data, speculation has flourished. Julie Brunner, executive director of the Minnesota Council of Health Plans, made headlines when she suggested at an event last month that premiums would jump 8% to 12% in 2015.

Dayton recently called for the premiums to be released Oct. 1 but that would require the consent of the plans. Four Republicans are vying for the nomination to take on Dayton in November. They'll square off in a primary contest Tuesday. “The governor is under a lot of pressure,” said Larry Jacobs, a political science professor at the University of Minnesota who closely tracks healthcare issues. “Clearly there's sensitivity about it. He doesn't want it to become an issue.”

Jacobs argued that the debate over premiums is obscuring a more fundamental issue that should be debated by the gubernatorial candidates -- the increasing prevalence of narrow-network plans and their implications for healthcare delivery.

“That's really where the policy attention needs to be,” Jacobs said. “The premium increase is easier to talk about in a 30-second attack ad, but I don't think it's the crux of the matter.”

Arizonans subject to insurance mandate, penalties, court rules

Arizonans are subject to the ACA's individual mandate and tax penalties, a federal appellate court ruled Thursday. In 2010, Arizona voters approved a state constitutional amendment stating that they can't be forced to obtain healthcare coverage under Obamacare. But a three-judge panel ruled the amendment is unenforceable because it conflicts with the federal healthcare law. The plaintiffs, who are represented by the libertarian Goldwater Institute, are weighing an appeal to the U.S. Supreme Court.

Most people believe subsidies shouldn't depend on where they live

Most Americans believe they should have access to federal premium subsidies whether they live in a state with its own state-run exchange or one that relies on HealthCare.gov, according to a poll conducted by The Morning Consult. Nearly 60% share that view, while just 15% believe residents of states using the federal exchange should be denied subsidies. The issue is at the center of the recent Halbig v. Burwell decision by a federal appellate court, which could result in individuals in 36 states losing access to subsidies if it's upheld. But most people aren't paying attention to the issue. Just 43% of respondents indicated that they were familiar with the issue in Halbig, compared with 57% who indicated that they had little knowledge about it.

Follow Paul Demko on Twitter: @MHpdemko


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