Get ready to pay more for health insurance.
The Kentucky Department of Insurance has approved health insurance rate hikes of up to 47 percent for individuals and up to nearly 13 percent for small groups.
The rates are effective Jan. 1 and will be used by insurance companies, including Humana, Aetna and UnitedHealthcare, to calculate insurance premiums for hundreds of thousands of Kentucky consumers next year.
Health insurers had requested an average rate increase of 29.4 percent for policies for individuals, but the state, after reviewing the requests “for several months,” scaled them back to an average 27.3 percent increase. The average is not weighted and therefore does not reflect the insurers’ market share. Market share data was not immediately available.
Insurance companies will use the rates to generate health insurance premiums they will charge individuals under the Affordable Care Act. Nearly 160,000 Kentuckians will be affected — though how much individual policies will increase depends on factors including age, place of residence and tobacco use.
For small group rates, the state approved a rate hike of 8.8 percent. Insurers had requested an average increase of 9.2 percent. Insurers will use those rates to generate health insurance premiums they will charge small groups, such as employers with 50 employees or fewer. About 135,000 Kentuckians get insurance through the small group market.
For Humana, the state approved increases of 31 percent for individuals and 7.2 percent for small groups. That means an individual monthly insurance premium of $100 could jump to $131. A $100 monthly insurance premium you get through a small group, such as an employer, could jump to $107.20. Increases will vary depending on factors mentioned above and whether customers qualify for subsidies.
Rates that insurers will use to set premiums for the roughly 250,000 Kentuckians who work for larger companies will be set later this year. The department does not have jurisdiction over the self-insured large group market and therefore does not track those numbers.
The state’s Public Protection Cabinet said insurance companies requested the rate increases for reasons including market forces, an aging population “and the general instability injected in the state health insurance market by Obamacare.”
The Affordable Care Act, aka Obamacare, was signed into law by President Barack Obama, a Democrat, in 2010. It established a federal health exchange through which individuals can purchase health insurance, with some qualifying for subsidies. The U.S. Department of Health and Human Services estimates that 20 million Americans who previously lacked health insurance are now covered because of the ACA.
Some states, including Kentucky, also set up exchanges — though Republican Gov. Matt Bevin has pledged to dismantle Kentucky’s Kynect exchange, which was set up under his predecessor, Democrat Steve Beshear. The ACA included other provisions, such as allowing children up to age 26 to be covered under their parents’ policies, and prohibiting insurance companies from withholding care from people with so-called pre-existing conditions.
Health insurers, including Humana, have said they have struggled with customers gained through the exchanges, because those customers have tended to be sicker — and therefore more expensive — than expected. Insurers and the ACA’s architects had hoped the higher-than-average costs for the pent-up health care demands of older and sicker patients who previously lacked health insurance would be offset by younger, healthier patients. However, while sicker people have signed up because they needed health care, healthier Americans have declined to sign up. Those dynamics have caused insurance companies to lose money on the customers they have gained through the ACA. Aetna said this week that it projects to lose $300 million this year on customers gained through the exchanges. Humana said today that it expects to lose more than $300 million on the business.
Kentucky Insurance Commissioner H. Brian Maynard, a Bevin appointee, also said in a news release that “Kentuckians in particular have felt the damaging effects of Obamacare since the failure of the Kentucky Health Cooperative, created under Obamacare and the Beshear administration.
“The Co-op’s failure required the remaining insurers to absorb the more than 50,000 former Co-op customers, many of whom were high risk customers, and explains the 2017 rate filings, which will result in increased premiums for Kentucky citizens,” Maynard said.
The department could not say what share of the health insurance rate hike was a result of the co-op’s failure.
The U.S. Department of Health and Human Services told IL via email that it had no comment on Maynard’s assessment, but said that most people receive tax credits and can buy an insurance plan for less than $75 per month.
The HHS also said that:
- 67 percent of marketplace consumers in Kentucky receive tax credits, which are designed to protect consumers from premium increases and help make coverage affordable.
- Tax credits increase if the cost of the second lowest-cost silver, or benchmark, plan goes up. That means that if all premiums in a market go up by similar amounts, 67 percent of marketplace consumers will not necessarily pay more because their tax credits will go up, too.
- Nearly 94,000 Kentuckians signed up for coverage this year.
- Since major provisions of the ACA went into effect, the share of Kentuckians without health insurance has fallen from 18.8 percent in 2013 to 6.8 percent in 2015 for non-elderly residents.