Regulators approve higher health premiums to strengthen Obamacare insurers

State insurance regulators across the country have approved health care premium increases higher than those requested by insurers, despite a national effort to keep rates for policies sold on Affordable Care Act exchanges from skyrocketing, a USA TODAY analysis shows.

In eight states, regulators approved premiums that were a percentage point or more higher than carriers wanted, said Charles Gaba, a health data expert at ACASignups.net who analyzed the rates for USA TODAY. As of Tuesday, those states are Arizona, Pennsylvania, Colorado, Florida, Georgia, Kansas, Minnesota and Utah.

Pennsylvania regulators approved individual plan rate increases Monday of 33%, which is eight points higher than requested. Two insurers — Keystone Health Plan and Geisinger Quality Option — will also no longer offer plans on the ACA exchange for the state.

"These rate increases make it clear that Washington needs to move swiftly to address consumer needs under the Affordable Care Act," Pennsylvania insurance commissioner Teresa Miller said in a statement.

But Gaba doesn't think it's as bad as it appears.

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“To consumers, this seems terrible like, ‘Oh, they’re price gouging us,’ ” Gaba said. “But part of regulators’ jobs is to keep insurance companies solvent so they can continue to give people insurance.”

Gaba's analysis of rates for the individual insurance market includes some of his own projections based on available data  It also weights the averages of different insurers' rate increases, based on their relative market share. The averages also assume that all of those now insured renew their existing policies and doesn't include new policies since there’s no earlier rates with which to compare those.

This market now covers about 18 million people who don't get their insurance through work, Medicare, Medicaid or the Department of Veterans Affairs. About half of these people get some subsidies to pay for insurance.

The Kaiser Family Foundation said Tuesday that more than 5 million people who are uninsured are eligible for tax credits to help pay their premiums.

This year may be the last for dramatic premium increases as insurers now understand their new markets better, say some supporters of the law, including the head of the Centers for Medicare and Medicaid Services (CMS).

In fact, this year many insurance carriers have requested premium rate increases that are closer to what regulators think are appropriate, says Gaba.

“Ideally you want what’s requested to be what’s necessary,” he added. “And that was part of what happened.”

Insurer withdrawals from some markets and rate hikes of more than 50% in some areas prompted fears that some insurance marketplaces were at risk of collapsing.

Carriers that have raised premiums significantly include Blue Cross Blue Shield in New Mexico, which raised premiums by 83%, and Crystal Run Health Insurance in New York which raised premiums by about 80%.

But there are some insurers with premiums that had big drops, including Medical Health Insurance of Ohio, which cut them by about 17%.

“The business was underpriced in many markets in the first couple years,” says Andy Slavitt, CMS' acting administrator. “In retrospect, life would have been a lot better and easier if things had started 10% higher, the rate increases had been higher and it had been just a smooth steady climb.”

Insurance regulators are also trying to keep insurance affordable by petitioning lawmakers to revamp Obamacare. That’s what Al Redmer Jr., Maryland's insurance commissioner, was fighting for when he testified before the House Committee on Oversight and Government Reform in mid-September. The premium approval process is more transparent than ever, Redmer said in his testimony, but health care still isn’t getting more affordable.

Part of the problem is how uncertain the health care market is for carriers, Redmer said. Carriers bring proposed rates to state regulators in May, but the numbers they produce have to cover the rest of the year. That means insurers have to scramble to get numbers that will project what their expenses will be for the next year.

“You’re projecting your chances a year and a half in advance. That’s difficult enough, but when you know the federal government will change their rules multiples times within that 18 months that creates more uncertainty,” Redmer said.

Gaba's analysis also showed that regulators approved rates that were lower than requested in 12 of the 40 states plus Washington, D.C where they have already signed off on them.

Some of the lowest income people are struggling in states where many others who are eligible for minimal or no subsidies are also hard hit. A Department of Health and Human Services report in August found expanding Medicaid coverage to the poorest of the poor lowers marketplace premiums by 7%. Oklahoma and Tennessee — which have had a 76% and 56% increase respectively — did not expand Medicaid.

It isn't a sure-fire way to keep premiums low, however, Minnesota, where premiums have risen an average of about 57%, expanded Medicaid in 2014.

That's hit Minnesota meeting planner Kathryn Barker hard. She has been paying for her own insurance for 25 years and saw her premiums nearly double on her Blue Cross Blue Shield (BCBS) plan from $360 before the ACA exchanges opened to $600 a month today.  She calls that "anything but affordable" and now faces the possibility of paying more with BCBS' withdrawal from the individual insurance market in her state.

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Barker's income can fluctuate considerably, but she is eligible for tax credits and possibly subsidies to reduce her share of health costs. The Commonwealth Fund reported recently that the ACA's “cost-sharing reductions” can make silver plans equivalent to platinum plans in terms of benefits thanks to lower out-of-pocket costs. They’re available for people making between 100% and 250% of the federal poverty level — or about $20,000 to $50,000 a year for a family of three. About 7 million people took advantage of the reductions in 2016, the study said.

Before the ACA, insurers could decline to insure people who had preexisting conditions so many of the first people to sign up on the exchanges were those who couldn’t get insurance before.

“Nobody really knew what it would cost to insure sick people,” Slavitt said. “I don’t know how (anyone) could have known.”