Double-digit rate hikes still a reality
Insurers already are anticipating the need to raise prices for 2015, reports Reuters. The first group of enrollees represents a higher rate of older and more costlier members than anticipated so insurers will need to raise premiums to avoid losing money.
"Do the premiums need to rise, just to cover the cost, to such a level that it creates both political heat, regulatory heat, finger-pointing, accusation?" CareFirst BlueCross BlueShield CEO Chet Burrell said at the Reuters Health Summit in Washington, D.C., on Tuesday. "If that happened, then the environment becomes very difficult and it doesn't in a sense matter that you worked out all the details. You're at each other's' throats because it just costs so much."
WellPoint CEO Joe Swedish said healthcare reform enrollment matched the company's expectations, and he predicts double-digit hikes in exchanges next year, according to the Indianapolis Business Journal. WellPoint's rate hike announcement startled certain industry analysts, who expected increases similar to the medical trend, not double digit.
The medical trend seems to be running slower than normal, notes the IBJ. National increases in medical spending have been at 3.9 percent for the last few years, but that may change, since the fourth quarter of 2013 saw healthcare spending rise by 5.6 percent--the highest rate in 10 years.
Some policy experts question if insurers should raise prices next year. "You want to establish a client base. You want to attract good risks," said Henry Aaron, an economist at the Brookings Institution, Reuters reported. "You don't do that by charging very high premiums."
However, states like California are confident they will avoid sharp rate increases due to exchange enrollment success. Covered California Director Peter Lee said insurers looking at enrollment to calculate future rates will likely have single-digit premium increases, according to Reuters.
WellPoint predicts double-digit rate increase
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