President Obama buckled under political pressure last fall and exempted a wave of plans that would have otherwise been cancelled under the Affordable Care Act. He made the decision after critics blasted him for his famously flawed promise, "If you like your plan, you can keep it."
While the new rule to grandfather in these non-compliant plans may have been beneficial for some people who didn’t have to find new policies this year, it could ultimately mean higher premiums for 2015.
That’s what some insurers are saying.
Though premiums are expected to increase moderately by 7.5 percent, some insurers in Florida, Iowa and North Carolina have requested rate increases between 11 percent and 18 percent due in part to last fall’s rule change, Politico first reported. They say adults who opted to keep their old plans have disrupted the risk pool since insurers had counted on those people to sign up for plans on the exchanges.
Blue Cross Blue Shield of North Carolina’s Vice President Barbara Morales Burke told Politico that the Obama administration's decision is "definitely" driving up 2015 exchange plan rates…adding that a very large share of people opted to keep their plans.
Since it’s only a one-time adjustment, she said the hikes wouldn’t likely be a permanent trend. "It's a one-time adjustment for what we didn't assume and couldn't have assumed last year before we knew transitional plans were going to be a possibility," she added.
Likewise, Florida Blue has requested a premium hike of 17.6 percent on average for its exchange plans—attributing the hike, in part, to the transition policy.
The premium increases range largely from market to market. In some areas, the transitional policy had a larger effect than others since it depends how many people are staying on the non-compliant plans.
The price of premiums had been trending upward long before the Affordable Care Act. But some had warned early on that prices could soar even higher due to a combination of new taxes as well as several consequences of the law’s rocky rollout—including the grandfathering in of non-compliant plans.
Now, experts say they expect rates to rise only by an average 7.5 percent next year, according to the Health Research Institute, which analyzed premium submissions in 27 states and the District of Columbia.
And while premiums for the exchanges aren’t expected to skyrocket next year as some had thought, the big cost increase comes in the deductibles. A study by HealthPocket last year revealed that deductibles sold on the exchanges are 42 percent higher than an average deductible on an individual purchased plan.
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