The Reason Behind the Obamacare Premium Increases

Sarah Kliff in Vox: “Insurance markets are complicated. But the story of Obamacare’s 2016 premium increase is actually pretty simple: Many health plans — even those with decades of experience selling insurance — underestimated how sick health law enrollees would be.”

“This meant that in 2014, many insurers spent more paying out medical bills than members paid in premiums. Premera Blue Cross Blue Shield of Alaska lost $9 million covering just under 8,000 Obamacare enrollees that year. In Colorado, Rocky Mountain HMO found medical bills to be about 36 percent higher than premiums.”

“Now insurers are raising their rates to make sure premiums do cover claims. In some states, that means double-digit rate hikes.”

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“Insurance plans are likely going to watch 2016 to see whether enrollment continues to increase, which would be a sign of healthier consumers entering the market after sitting out earlier sign-up periods.”

“‘Enrollment has to grow to make the market attractive,’ Kaiser’s Levitt says. ‘If it plateaus, some might think twice about participating.'”

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