Complicated transition for ACA
August 30, 2015
Earlier, we noted that states like Oregon were requiring that insurance companies raise their premiums. Kaiser Health News reported that the Department of Health and Human Services (HHS, part of the federal government) is pushing for lower insurance premiums. The conflicting directions probably stem from different emphases on time frames from different departments.
State insurance regulators have a longer-term fear that insurance companies who set their premiums too low will go out of business, leaving the state exchanges short on viable options. HHS, on the other hand, probably wants to cement some goodwill in the general population, especially before the 2016 elections. Part of the issue is that insurance premiums for many Americans increased when ACA rolled out (my personal premiums basically doubled). The recent media about insurance companies requesting 20% or 30% annual increases (on top of earlier increases) certainly gives additional ammunition to ACA's critics. Understandably, HHS would want to minimize these increases, perhaps arguing that a short-term outcome that is favorably received by the general population is necessary for the long-term success of the law. It'll be interesting to see where premiums settle over the next few years, and whether or not those increases are above or below the annual premium growth of the decade before ACA.