Health Insurance Rates Are Going Up Next Year, But It's Nothing to Panic Over

| Sun Mar. 30, 2014 4:11 PM EDT

The LA Times has a piece today about the next battleground for Obamacare: rate increases for 2015. The warnings are already coming thick and fast:

WellPoint Inc., parent of California's leading health insurer in the exchange, Anthem Blue Cross, has already predicted "double-digit-plus" rate increases on Obamacare policies across much of the country.

.... Health insurers aren't wasting any time sizing up what patients are costing them now and what that will mean for 2015 rates. Hunkered down in conference rooms, insurance actuaries are parsing prescriptions, doctor visits and hospital stays for clues about how expensive these new patients may be. By May, insurance companies must file next year's rates with California's state-run exchange so negotiations can begin.

I hope everyone manages to restrain their Obamacare hysteria over this. Here in California, we've played this game annually for years. Health insurers in the individual market propose wild increases in their premiums—10 percent, 20 percent, sometimes even 30 percent—and then dial them back a bit after consumer outrage blankets the media and the Department of Insurance pushes back. But even then, we routinely end up with double-digit increases. Just for background, here are the average annual rate increases requested by a few of California's biggest insurers over the last three years:

  • Anthem Blue Cross: 10.7%
  • Aetna: 12.1%
  • Blue Shield: 15.4%
  • HealthNet: 12.0%

And this doesn't include changes in deductibles or out-of-pocket maximums. Add those in, and the annual proposed increases are probably in the range of 15-20 percent. Obamacare, of course, limits both those things, which means that in the future insurance companies will have to put everything into rate hikes instead of spreading the increases around to make them harder to add up.

Bottom line: if we end up seeing double-digit rate increases, it will be business as usual. Insurance companies will all blame it on Obamacare because that's a convenient thing to do, but the truth is that we probably would have seen exactly the same thing even if Barack Obama had never been born. So let's all keep our feet on the ground when the inevitable huge rate increase requests start flowing in. It's mostly an insurance company thing and a healthcare thing, not an Obamacare thing.