Obamacare premiums and related expenses are expected to increase significantly in 2017 due to market shifts and rising drug and healthcare costs. These rate hikes will dramatically increase Texas health insurance rates as well, which is not the best news for the highest uninsured state in the country.
Although the increases will be substantial, premium subsidies are expected to offset some or all of the rate increases for eligible enrollees. As of March 2016, about 84% of Texas exchange enrollees were receiving premium subsidies. Because each plan will be different, it will be crucial for Texas citizens to compare all health insurance options during the enrollment period.
Rate Increases Proposed by Texas Health Insurance Plans for 2017
Just how high will insurance rates climb for Texas health insurance plans? According to the rates listed below, anywhere from 7% to almost 60%. The following rate increases are being proposed by 16 Texas health insurance carriers that have Obamacare exchange plans:
- Aetna: 15.19%
- Allegian: 27.48%
- AmBetter (Celtic): 15.51%
- Blue Cross Blue Shield of Texas: 58.40%
- CHRISTUS Health: 17% to 30%
- Cigna: 23.50%
- Community First: 7.5% to 8.7%
- Community Health Choice: 6.91%
- FirstCare (SHA): 29.13%
- Humana: 43.35%
- IdealCare (Sendero): 19.68%
- Insurance Company of Scott & White: 19.62%
- Molina: 9.60%
- Oscar: 11.7% to 22.3%
- Prominence Health First: 31.85%
- Scott & White Health Plan: 19.62%
Drivers of Texas Health Insurance Premium Changes for 2017
What’s behind the expected premium increases for Texas health insurance companies? There are a number of factors, including:
Healthcare spending is on the rise: U.S. healthcare spending increased by 5.3% in 2014, reaching a record level of $3 trillion. For several years prior to 2014, healthcare costs were relatively stable. Medical costs are on the rise as well and are expected to increase during open enrollment in 2017 as well.
Climbing prescription drug prices: Prescription drugs are now more expensive than ever before. In fact, they are so expensive that insurers and government healthcare programs are having a hard time keeping up. The biggest price increases consist of newer specialty drugs to treat the Hepatitis C virus and cancer. Pharmaceutical companies such as Allergen PLC, Pfizer Inc., Amgen Inc., and many others have raised prices on dozens of branded drugs between 9% and 10% since December 2015, according to the Wall Street Journal.
Limitations of the Affordable Care Act: Under the Affordable Care Act, Texas health insurance companies are required to insure anyone regardless of their general health or pre-existing conditions. There is also a cap on profits and each company has to be structured in a certain way, which has led to many losses for health insurance companies already.
Risk mitigation programs to expire in 2017: Another factor that will likely force health insurance companies to raise premiums is that two federal “risk mitigation” programs created under Obamacare are set to expire in 2017. These programs were set up to protect insurers from huge losses as a result of offering plans on the health insurance marketplace. Since these programs will no longer be in place, insurance companies are expected to hike up premiums to cover up their risks.
It is important to note that none of the rates proposed by Texas health insurance companies are set in stone yet. The rates have to be approved by state and federal regulators. Plans will also evaluate market conditions and regulatory approvals before a decision is made. Some health insurance companies including United Healthcare are planning to leave the Obamacare exchange at the end of this year due to projected losses.
Families and individuals currently under Texas health insurance plans, or considering joining one, should compare all options before making a decision. It is best to start planning early and to contact your health insurance provider to be informed of when rates are going to up and by how much.