PPACA World 2017: Rates might not be THAT bad

Dave Dillon is speculating that 2017 individual health insurance rate increases might be pretty ugly, but not necessarily catastrophically ugly.

Dillon is an actuary and health insurance analyst who produces health expert interview podcasts for the Society of Actuaries (SOA). He helps regulators in seven states review rate filings. He gave his views on 2017 individual health rates in a recent commentary.

The national individual health rate filing deadline for 2017 is May 11.

Some big health insurers have reacted to the performance of the 2016 individual market by refusing to pay sales commissions on products agents sell through the Patient Protection and Affordable Care Act (PPACA) special enrollment period (SEP) process. Other insurers seem to be happy with the performance of their individual products.

A few states have posted some 2017 form and rate filings online, but it's not clear how representative those filings are, even for those quick-posting states.

Dillon has been involved in rate-setting processes in several states, and has an idea of what the actuaries and their clients are talking about as they struggle to complete 2017 filings.

Major PPACA underwriting restrictions and benefits requirements took effect in January 2014. Some insurers have had widely reported problems setting adequate individual health rates for 2014 and 2015. But in 2013, SOA actuaries combined to publish what appears to have been a reasonably accurate forecast of how the changes would affect enrollee claims: The actuaries predicted that the PPACA rules might increase individual health rates about 29 percent.

For a look at what Dillon is saying about 2017 rates, read on.

1. We won't really know about 2017 health rates till we know.

Dillon wants to make sure the public takes his predictions with many grains of salt.

He knows what's happening in some states, and at some PPACA public exchange programs. But he emphasizes that he has no way of knowing what's happening in every state.

The health needs of each state's population vary widely, and so do state regulatory policies, Dillon says.

Piggy bank in a vise

2. The typical individual health rate increase in a typical state may be in the "high single digits to the low double digits."

Dillon estimates the general rate of increase could range from the high single digits to the low double digits, or about 7 percent to about 14 percent.

Increases of that size were common before PPACA rules took effect.

Increases of the kind Dillon is seeing might be disappointing to PPACA supporters who were hoping PPACA changes would hold down premium increases. But if Dillon is correct, the increases might also be disappointing to PPACA opponents who are hoping they can use reports of 50 percent and 100 percent premium increases against Democratic candidates in upcoming presidential and congressional election campaigns.

Typical people, who might have gotten covered thanks to PPACA

3. Any increase pressure resulting from pent-up demand for care may be easing.

Here's how Dillon sizes up the individual health premium increase drivers:

Increases in the underlying cost of medical care may add 5 percentage points to 6 percentage points to the typical premium increase.
The end of the PPACA reinsurance program, which is supposed to use a broad fee on all carriers to help issuers pay the bills of individual enrollees with catastrophic claims, may add 3 percentage points to 4 percentage points to the typical increase.
The end of the PPACA reinsurance program fee may cut the typical increase by 2 percentage points to 3 percentage points.
A full understanding of what claims were like in 2014, and preliminary information about 2015 claims, could have an effect on premium increases that's hard to estimate.

Some insurers have said that individual health plan enrollees filed more claims in 2015 than they expected, and some say enrollees are filing more claims this year than they expected. But other insurers have said that claims for 2016 seem to be in line with expectations.

Uninsured consumers who got covered for the first time in 2014 may have been uninsured because they were too sick to qualify for commercial coverage under the pre-PPACA rules, and some consumers who got covered in 2014 or 2015 may have had a pent-up need for care that drove up claims early on, Dillon says.

Now that issuers understand the needs of the high-risk enrollees who got covered in 2014, and the percentage of previously uninsured enrollees with a pent-up need for care falls, those factors could help hold premium increases down, Dillon says.

But whether the current insured population is getting healthier or sicker may vary dramatically from carrier to carrier, Dillon says.

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