Don’t Pay Attention to Obamacare Rate Increase Horror Stories


I wrote about this once before, but it’s worth repeating: don’t pay too much attention to scare stories about gigantic increases in Obamacare premiums next year. Insurers that request increases of more than 10 percent are required to get clearance from state and federal regulators, which means that the only increase requests that are public right now are the ones over 10 percent. Jordan Weissmann explains what this means:

“Trying to gauge the average premium hike from just the biggest increases is like measuring the average height of the public by looking at N.B.A. players,” Larry Levitt of the Kaiser Foundation told the Times. Moreover, some states may ultimately end up rejecting the gaudiest requests if they’re deemed unjustified.

How skewed is the federal database? Here’s one telling illustration from ACAsignups.net founder Charles Gaba. In Washington State, 17 insurers submitted health plans for next year, requesting an average rate increase of 5.4 percent. Only three of those companies asked for a big enough hike to show up on the federal rate review site. Together, they requested bumps averaging 18 percent, more than three times larger than the actual statewide mean. That gap should make everyone think twice before drawing conclusions from yesterday’s data dump.

This will be the first year in which insurance companies have a full year of experience with Obamacare to draw on. Does that mean it’s possible that rates will go up a lot, now that they know what they’re in for? Sure, it’s possible. But so far there’s really no evidence that the demographics of the Obamacare population are very different from what the companies expected. Nor are companies dropping out of Obamacare. In fact, in most states competition is increasing. All that suggests that Obamacare premiums will rise at a fairly normal rate next year. For the time being, then, don’t pay too much attention to the Fox News horror stories. We’ve heard them all before.