Premiums on the Obamacare insurance exchanges for individual-market plans are likely to rise significantly for 2015—in some cases by double digits—but those spikes may be lower than some had predicted.
Experts say insurers appear to be taking a cautious approach to setting rates largely because they have little information about their emerging customer base. But increased competition in the online marketplaces is likely to keep premiums down. Rates in the individual market typically rose steeply before the Patient Protection and Affordable Care Act took effect, and it remains to be seen whether that will change under the law.
Insurance premiums could be a potent political issue in the November congressional elections, with Republicans pointing to any major increases as evidence that Obamacare is a failure. Democrats are hoping the increases are moderate, and the Obama administration and state Democratic officials are expected to put pressure on insurers to keep them down.
Analysts at J.P. Morgan concluded from the initial flurry of proposed rates and conversations with insurers that 2015 premium increases are likely to be more modest than some observers anticipated. “Although still likely large enough to draw political criticism, we view hikes at this level as relatively modest in relation to the highest expectations given several factors pressuring rates,” according to the investment firm's analysis.
Insurers are just beginning to file proposed 2015 rates in states across the country, with some rates published in Arizona, Indiana, Kentucky, Virginia and Washington state. Maryland's and Colorado's are expected soon. The filings will be scrutinized by regulators and in some cases rejected if the regulators decide insurers haven't provided sufficient justification for increases. Insurers are filing rates with little information about how expensive their new customers will be. That's in part because many Americans signed up in March and April during the final, frenetic weeks of open enrollment.