Employee Benefits

Have Obamacare Rates Stabilized?

Den Bishop
Den Bishop
Senior Advisor

I realize I may be jinxing the topic by even bringing it up, but it’s too worthy of a subject not to shed a little light on it. January 1, 2019, marks the start of the 6th year of the federally regulated insurance marketplace, also known as Obamacare. If you’re an employer, I’m sure you know (and felt) the first five years, which resulted in high volatility in networks and increases in rates. Here’s the thing, though. The 2019 rates have been filed and approved with limited attention, news coverage, or fanfare. Does this mean there really isn’t anything newsworthy going on anymore?

Well, analysis of the Blue Cross Blue Shield small group rates in eight states with Holmes Murphy’s largest offices shows the average lowest rate increase to be 1.12 percent and the average highest rate increase to be 5.82 percent. I’ve copied them below to give you an idea of the percentages.

rate increases

So, what is creating this comparative calm? The high rate increases last year, and in the previous years, have finally caught up with the risk in the covered populations. The networks have been narrowed and focused to allow for more favorable provider negotiations. I don’t believe the relationship between regulators in Washington D.C. and the insurance industry has reached permanent peace, but we should enjoy this upcoming quiet renewal season.

Does this mean larger groups should expect historically low rate increases? Quite simply, no…we’re just not there. Large group renewals are heavily influenced by the claims loss ratio and associated risk within the group. Catastrophic claims activity and the use of high-cost specialty drugs are the biggest drivers of renewal variability for individual groups outside the regulated marketplace. Solutions, such as reference-based pricing and closed formularies, provide potential relief, but many employers are struggling with the potential member disruptions of these answers that challenge the status quo in healthcare.

Affordable health insurance renewals don’t help the “repeal and replace” Republicans or the “Medicare for all” Democrats, so this doesn’t make the news. In healthcare, it appears “no news is good news.”

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