With Georgia Insurance Commissioner Ralph Hudgens in the news lately for his request to delay the approval of health insurance premiums for the health exchange in his state, many people are left wondering what this means for them.
Since health care reform (known officially as the Affordable Care Act and often referred to as Obamacare) is set to launch in January 2014, it‘s likely that more and more states will be requesting reviews of their insurance exchange rates. As the new rates per state begin to be released, the news is just what we’ve been predicting — most insurance premiums are increasing between 50% and 200%, depending on the state in which you live.
In Georgia, the problems are escalating. As of July 31, 2013, two of the main insurers in the state have now made the decision to pull out of the insurance exchange. These two companies, Aetna and Coventry, previously submitted rates, but have since revoked their participation.
The concern for both companies is that providing the coverage required by the Affordable Care Act is not a financially viable option for them at this time. Instead, they will continue to provide insurance for Georgia residents through independent agents that is not part of the subsidized plans available through the “exchange.” They can opt to offer these plans in 2015, however.
Since Aetna and Coventry have both removed themselves from the Georgia health exchange, this leaves few insurers to provide coverage. In fact, there are only five companies now participating in the exchange. This is also a concern for many Georgians because in some areas of the state there will be only one insurance company to choose from. This isn’t exactly going to encourage more competition, which is really what is needed in order to keep prices in check.
Georgia is not the only state that has noticed substantial premium increases. As industry experts have predicted, it’s looking more and more as though insurance premiums for the young are going to rise dramatically, while premiums for older individuals with existing health issues may slightly decrease.
The reasons for the premium increases are many. For one thing, all of the plans available for purchase are guaranteed issue plans, which means that no one can be denied coverage for a pre-existing condition. The plans purchased through each state’s insurance exchange also provide mandatory coverage for certain health expenses such as maternity and preventative care.
Many current insurance policies require copays for preventative care and separate maternity deductibles, which will no longer be the case as the Affordable Care Act rolls out in January. Lastly, people will not have the option of reducing unnecessary or unwanted coverage; it is an all-or-nothing gamble, with no chance to try to reduce premiums by absorbing some of their own medical costs.
So what does all this mean to consumers? At this point, it looks like the younger generation is going to have to either absorb the additional expenses of insuring older individuals with health problems or opt out of purchasing the federally mandated insurance. If this is the case, they will pay a penalty of either 1% of their annual income or $95, whichever is greater.
For many people, paying the penalty is the more reasonable option, despite the fact that they will remain uninsured. If they do choose to purchase a policy, however, they should not be surprised to see rate increases of over 100%. Even most of those who qualify for a subsidy will experience rate increases. For too many people, the Affordable Care Act is something that is not affordable at all, but instead will cause more financial hardship to many of those who are least likely to be able to weather it.
As August rolled around, Ralph Hudgens did not receive the rate review he requested from the Department of Health and Human Services. No one, least of all him, is surprised that the Obama administration did not take his concerns seriously and did not approve the rate review. Therefore, Hudgens had no choice but to approve the rates for Georgia. His disappointment was palpable as he announced the news that the rates for the health exchange would not be reviewed. Now, only time will tell how devastating this news is going to be for Georgia residents.
Although this particular post is Georgia-specific, people all over the country are going to be feeling the same kind of pressure, both financial and otherwise, as the Affordable Care Act is put into place. Although there are some tax subsidies for those who purchase insurance, for a large percentage of people the subsidies are not enough to make up for the rate increases that are occurring.
The fact that Ralph Hudgens is brave enough to stand up and say that this isn’t right should serve as an example to other insurance commissioners. Whether the Obama administration acknowledges his concerns or not, Hudgens has made it clear that the people in his state are his first priority.
From agent to V.P. of Business Development, Fred Adams has filled most every role imaginable during 21 years working with health insurance. When Congress passed the 2003 law on health savings accounts, Fred was dubbed “The HSA Expert” by press and a growing, fanatical client base.