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Obamacare premium hikes called ‘one-time’ fix

MIAMI, FL - DECEMBER 15: An Obamacare sign is seen on the UniVista Insurance company office on December 15, 2015 in Miami, Florida. Today, is the deadline to sign up for a plan under the Affordable Care Act for people that want to be insured on January 1, 2016. (Photo by Joe Raedle/Getty Images)

NEW YORK — Obamacare is not in a death spiral. In fact, insurers’ prospects in the individual market are looking brighter, according to a new S&P Global Ratings analysis.

Insurers have started closing the kind of eye-popping losses that prompted them to hike premiums for the Obamacare benchmark plans an average of 25% for 2017. S&P expects rate requests for 2018 will be “well below” that level.

“We view 2017 as a one-time pricing correction,” the report found.

S&P did not take into account the impact of President-elect Donald Trump’s vow to repeal Obamacare next month. What happens in 2018 and beyond will depend on how and when Trump and congressional Republicans replace the health reform law, S&P said.

The individual market — both on and off the Obamacare exchanges — has proved challenging for the insurance industry. Many insurers initially underestimated how sick enrollees would be, leading them to price their plans too low. The industry suffered $3 billion in losses in this market in 2014 and another $4.5 billion last year, promoting some insurers to scale back or exit the sector.

To address this, insurers raised their rates for 2016, limited their networks of doctors and hospitals to lower-cost providers and boosted the use of HMOs, which employ primary care providers to manage patients’ medical needs more closely. Also, the Obama administration tightened the rules for signing up for policies outside of open enrollment after insurers complained that lax enforcement allowed people to join only when they became sick.

S&P expects 2016 losses will come in at less than $3 billion. And insurers will be closer to break-even in 2017, with more reporting profits in the individual market segment.

“We are getting the first signs that this can be a viable market for insurance companies,” said Deep Banerjee, a director at S&P Global Ratings.

How has Obamacare affected you? How should President-elect Trump reform health care? Email Senior Writer Tami Luhby at tami.luhby@cnn.com. You could be cited in an upcoming CNNMoney story.

5 comments

  • confused

    A one time fix because it’s going away. Hopefully parts of it at least.The only reason it stayed is because the insurance companies hiked rates and lessened choices. You think they will not do that again? Don’t forget the Cadillac tax kicks in 2018? to pump even more $ into this broken AHCA to keep it up and running unless something is done. It is NOT right to punish people when their plan is too good or to fine people who cannot afford a premium AND a place to live. Those on assistance do not have to choose between rent and health care they are and always will be covered for both.
    “We are getting the first signs that this can be a viable market for insurance companies,” no $#%. When your rates exceed your actual costs you make money.

  • theylltakeyourguns

    The premiums for my employer-provided health insurance increased every year under W’s presidency. President Obama’s regulation held those increases to every other year. At least I was able to save a little money. Do you honestly think your premiums won’t continue to increase under anyone else? The insurance companies (among others) OWN our government. We exist only to line their pockets and none of them give a d*mn what we want, think or need.

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