Health Insurance Company Requests For Double Digit Premium Increases Plummeting-More Proof Obamacare Is Working?

In what could be another example that health care reform is actually hitting the targets intended by the controversial Affordable Care Act, government research shows that in the 15 states that publically post their requests for premium rate increases, double digit rate increases have plummeted since passage of Obamacare.

 One of the lesser-discussed requirements written into the Affordable Care Act is the section that requires additional regulatory scrutiny—on both the state and federal levels— when an insurance company seeks a premium rate increase in excess of 10 percent. Under the law, the applicable regulatory authority can determine whether or not an effort to raise these rates by double digits is a reasonable or unreasonable rate hike.

In 2009, prior to passage of Obamacare, 74 percent of the requests made for rate increases by the health insurance companies in the 15 states were for bumps in excess of 10 percent.

However,  when the relevant provision of the healthcare reform law went into effect in 2011, that number began to fall precipitously.

In 2011, double digit bump requests totaled 50 percent of all insurance company requests, down roughly 25 percent from 2009. In 2012, the number feel more dramatically to 35 percent and, based on preliminary data for 2013, the number looks be all the way down to 14 percent.

Not bad.

Now, before you leave angry comments reminding me how this data does not represent the premium increases you may have had to put up with —or argue that the improvement is the result of the lower health care costs we have experienced over these past few years, you might wish to read on.

While there is an argument to be made that the more sensible premium requests in theses states are the result of the improving cost picture in healthcare, it appears that this may not be the primary cause for the reduction in double digit rate requests as we have not seen similar reductions in the group policy business that we are seeing in the individual market. Still, the report issued by HHS—while giving primary credit for the improvement to the increased scrutiny of rate hike requests resulting from the healthcare reform law—also noted that overall decline in healthcare costs throughout the nation played a role.

Interestingly, the insurance industry found this news to be good enough to claim a little credit for itself, suggesting that the lowered premium increase requests are the result of their improved efficiencies.

According to Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, “Health insurance premiums are not set arbitrarily. They are developed using established actuarial principles that take into account a variety of factors, including increases in medical costs, changes in the covered population, and new benefit mandates and regulations.”

What the data does not tell us is what is happening in all 50 states in the nation—as the survey is based only the 15 states that make this data publically available.

Still, for those willing to be objective about Obamacare, there is good reason to suggest that the added regulatory review instituted by the ACA seems to be paying dividends.

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