By John Reichard, CQ HealthBeat Editor
August 6, 2014 -- Summer's here and the time is right for fighting over rate shock.
That battle largely went to the administration last year with many young people getting access to subsidized coverage at a fairly low cost and older people able to buy coverage that earlier might have been denied to them outright.
This year the administration has painted a generally reassuring picture of what 2015 premiums will look like in the insurance exchanges when the next open enrollment period begins Nov. 15.
But no small number of Americans saw their individual coverage canceled because it didn't comply with benefit requirements of the health law and saw large premium increases.
For them, the charge that the health law produced "rate shock" rang true, even though their new benefits compliant with the health law typically were more comprehensive and in some cases they got subsidies.
It may ring true this coming year as well for Floridians of modest means who signed up for insurance in 2014 despite other demands on tight family budgets. Florida regulators this week unveiled average 2015 rate increases in the double digits. Nearly one million Floridians bought coverage on the federal site healthcare.gov despite the opposition of state leaders to the health law and their decision not to open a state exchange or expand Medicaid under the overhaul.
During testimony before a House Energy and Commerce Subcommittee last week the number two official at the Centers for Medicare and Medicaid Services (CMS) said that rate increases will be modest.
Rate hikes that are publicly available from some states thus far have been in the mid-single digits, Andy Slavitt, principal deputy administrator at CMS, testified July 31.
"While this isn't going to be true for every single individual in every single county in America, by and large the early results look positive—very positive," he said, California officials announced that day that rate hikes would average four percent in 2015.
But early last week, the Florida Office of Insurance Regulation announced that on average premiums would rise 13.2 percent in 2015 for plans in the individual market that comply with the health law. Of 11 returning plans, eight filed hikes ranging from 11 percent to 23 percent, and three lowered their rates from 5 percent to 12 percent.
The average monthly premium for a silver plan, the most popular type of exchange plan, ranges between $938 and $1,452 for a family of four earning $51,000, the insurance office said in a statement. "Even with a federal subsidy that could mean an out-of-pocket cost of $500 or more per month to have coverage that still requires Florida families to pay about 30 percent of expenses out of pocket for deductibles, copayments and coinsurance," the statement said.
Florida Democratic Senator Bill Nelson faulted state authorities for the size of the increases, saying they could have exercised their authority to conduct rate review under the health law but chose not to.
CMS has some leverage to bring the rate increases down.
"After tax credits, the average premium cost for people in Florida this year was $50 for a silver plan, the most popular plan type on the Marketplace," said CMS spokeswoman Tasha Bradley.
"Before the Affordable Care Act, consumers in individual market regularly faced annual double-digit premium increases. This is just the beginning of the process and as we saw last year all across the country, proposed rates were a high water mark and final rates were often lower than initially proposed."
"We are very pleased to see that the number of issuers planning to offer Marketplace plans in Florida has increased," she added.
CMS can't require an insurer to change rates through its rate review program, but it can choose not to certify a plan to be offered on the federal exchange if it decides it would not be in the interests of consumers to do so.
Even so, Families USA analyst Cheryl Parcham said "Florida's consumers would be better served if Florida's insurance department was empowered to conduct a fuller rate review."
A CMS official said that the average increase in Florida does not mean residents of the state won't have access to good deals next year. Premiums in the state were lower than the national average last year, the official said, and because of federal subsidies the average monthly premiums paid by enrollees in silver plans in 2014 were $50. And an estimated 75 percent of Floridians live in areas where premiums for the second lowest-cost silver plan will fall in 2015 compared to 2014, the official added.
