What’s New For Healthcare in 2017

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Significant changes in health care are on the horizon for 2017 that affect many Americans. The news is not good. For most Americans, health care premiums will rise in 2017. For some the rise will be astronomical.

60% Rate Hike Requested by Blue Cross Blue Shield of Texas
For example, many Texans selected Blue Cross Blue Shield of Texas for health care coverage using the official state insurance market. In some rural markets of Texas, this is the only option available.

This company is the largest health insurance company in the state with over 600,000 enrollees. The Dallas Morning News reported on June 1, 2016 that this insurance company wants close to a 60% rate hike for 2017.

The company claims it lost $592 million in 2015 on top of the $416 million it lost in 2014. The enormous rate hike request is to help the company recover from over $1 billion in losses. This information disclosure came from a request for rate review filed with the federal government. Federal regulators have to approve the rate hike if it exceeds 10%.

48% Rate Hike Requested by Highmark of Pennsylvania
The same thing happening in Texas is happening elsewhere. The Pittsburgh Post-Gazette said that the state’s large insurer, Highmark, which is a Blue Cross Blue Shield affiliate, requested rates hikes up to 48.1%. Highmark says it lost $812 million in the past two years on over 200,000 members that it insures.

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Source of the Losses

The insurance companies blame the losses on lower enrollment rates than expected, enrollees being sicker than expected, and trouble with the federal government’s backstop program for the insurance markets.

Many insurance companies, such as Highmark in Pennsylvania, sued the federal government for failing to provide the promised funds to cover losses in the early years of the Obamacare program.

Widespread Rate Increases

So far, insurance companies in 23 states and Washington, D.C. requested rate increases for 2017 that exceed 10%.

The states with insurance companies asking for rate increases in excess of 10%, as of June 1, 2016, include Arkansas, Florida. Iowa, Indiana, Kansas, Kentucky, Louisiana, Maryland, Maine, Missouri, North Carolina, Nebraska, New Mexico, Nevada, New York, Oklahoma, Oregon, Rhode Island, Texas, Virginia, Vermont, Washington, and Wyoming.

Insurers in other states either are below the 10% rate hike threshold or have not yet filed rate increase requests. They still have time to do this.

2016 Premiums Compared to 2017 Premiums

The International Business Times (IBT) reported that rate hikes are expected in most states, however; the amounts vary significantly.

The average monthly cost for a silver plan in 2016, which is a medium quality plan, is around $400 per month. Examples shown by IBT of large requested increases include Maine going from $495 per month in 2016 to $583 per month in 2017 ($1,056 per year higher), Oregon $441 to $540 per month ($1,188 per year higher in 2017), and Vermont going from $476 to $685 ($2,508 per year higher in 2017).

Government Subsidies Increase

The Federal government pays subsidies for millions of lower income individuals and families who currently qualify for partial financial support to buy health care coverage. The expectation is that the total amount of these government subsidies will dramatically increase in 2017, adding a significant amount to the national debt.

Many do not qualify for federal government subsidies, such as self-employed individuals, small business owners, and those who took early retirement before the age of 65 when Medicare coverage becomes available to them.

Summary

Although more Americans have health care coverage than before with total enrollment close to 90%, health care costs continue to rise for both insurance companies and individuals.

The choices for 2017 are looking bleak. Many Americans will have to pay for the astronomical rate increases. Those who cannot afford the rate increases will have to change coverage to downgrade their policy benefits. Those who give up coverage may face stiff penalties imposed by the IRS for not having health coverage.

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