Reform Update: Insurance premiums will be political fodder for fall elections

Premiums for 2015 healthcare policies are certain to become political fodder during the looming campaign season. That's in part a reflection of timing. Rates will be filtering out in the months leading up to the November elections and the open enrollment period commences less than two weeks after voters head to the polls.

But it's also indicative of another reality: Blaming rate hikes on Obamacare is an easy political tactic for Republicans.

“There's no question that regardless of how reasonable premiums look for 2015, the opponents of the Affordable Care Act will attack any premium increases,” said Elizabeth Carpenter, a director with the consulting and research firm Avalere Health.

A case in point is what happened when Ohio's proposed rates were released this week. The state's Republican Lt. governor, Mary Taylor, who also serves as director of the Ohio Department of Insurance, put out a statement blaming average rate increases of 13% on the federal healthcare law. “Continued and unnecessary headwinds out of Washington are making it more difficult for job creators, hard-working Ohioans and their families to purchase health insurance,” Taylor said in a statement.

But as the Cleveland Plain Dealer pointed out in an analysis of the rates, the 13% average spike gave equal weight to all insurers. That meant insurers with a small sliver of the market were represented equally with health plans that cover thousands of individuals. In particular, two of the state's major insurers, Medical Mutual of Ohio and Anthem Blue Cross and Blue Shield, proposed hikes significantly below the purported 13% average. Medical Mutual proposed a 7.7% spike, while Anthem requested an average increase of 8.9%.

At least nine states have released at least some of their 2015 rates. Disclosure rules vary widely across the country. Insurers in Virginia and Washington were required to file proposed rates last month and they were immediately made public. By contrast, state law bars New Hampshire officials from disclosing rates until they become effective. Insurers that want to sell products through the federal exchange must file their rates with the CMS by June 27. The filings are merely proposed rates, subject to review by regulators.

A report by analysts at J.P Morgan released Thursday found that rates were so far tracking close to expectations. “We generally expect rate requests in the low teens to draw criticism from political opponents of reform but not significant pushback from regulators given the 5%+ pressure on rates from smaller reinsurance pool and higher premium taxes,” they noted.

An analysis issued this month by Jonathan Gruber, a healthcare economist at the Massachusetts Institute of Technology, offered some rate hike context. From 2008 to 2010, the average rate hikes nationwide were 9.9%, 10.8% and 11.7% respectively. In addition, the ranges varied significantly by state. In 2010, for instance, premiums went up only 3% in Idaho, but spiked by more than 20% in Nebraska. Unlike the analysis performed by the Ohio Department of Insurance, Gruber weighted rates to account for market share.

“Premium growth nationally and at the state level from 2014 to 2015 should be compared to this benchmark,” Gruber concluded in the report, published by the Commonwealth Fund. “Conclusions should not be drawn from a small set of reported filings, but rather from a comprehensive picture of the national trends in premium growth.”

Larry Jacobs, a political science professor at the University of Minnesota, says that the nuances of premium calculations are unlikely to be grasped by the general public. “Most voters don't really know much about health reform,” Jacobs said. “That's hurt health reformers, Democrats, because many people don't know about benefits that they support very strongly.”

The federal healthcare law will reduce the deficit in the long run. That's been among the chief selling points for Democrats defending the unpopular law. It's based on a 2010 analysis by the Congressional Budget Office that found the ACA would trim the deficit by $120 billion over a decade. But that assumed the law would be fully implemented as written. Instead, the Obama administration has made numerous changes, including a delay in implementation of the employer mandate, which was expected to generate revenue. As Roll Call reported this week, that's led CBO's number crunchers, in a little-noticed April footnote, to express uncertainty about the long-term fiscal impact of the bill.

Timothy Jost has been among the most outspoken supporters of the ACA. The Washington and Lee University School of Law professor has tirelessly interpreted regulations stemming from the law and championed its successes in spreading coverage to more individuals. So it was particularly striking when Jost suggested in a blog post this week that the law's employer mandate be repealed. However, he's not calling for the requirement to be ditched entirely, merely tweaked to be less burdensome and more flexible for employers.

Follow Paul Demko on Twitter: @MHpdemko