Obamacare is getting pricier for Hawaii residents.
The state approved a 27.3 percent rate hike for Hawaii Medical Service Association’s individual members and a 34.4 percent increase for Kaiser Permanente members in Affordable Care Act plans for 2016.
The state and health insurance companies said they underestimated the cost of providing coverage to those insured through Obamacare last year and now have to adjust their rates to recoup the higher expenses.
“Nobody likes to see prices go up for the individual consumer,” said Insurance Commissioner Gordon Ito in a news release Monday. “However, upon close review of the carriers’ expenses, benefits paid and other considerations, our rate analysts and actuaries found premium increases were necessary for the carriers to cover their costs, enabling them to continue to pay their customers’ claims.”
The 2015 individual plan rates were “inadequate and needed to be adjusted significantly in 2016” in part because of pent-up demand for services by those previously uninsured, high-cost specialty drugs, and Obamacare taxes and fees, he added.
This year the lowest HMSA catastrophic plan for individuals under 21 is $77.03, while the highest is the platinum option for 64-year-olds at $819.65. Kaiser’s plans range from $84.14 to $619.38.
“We made the difficult decision to adjust our 2016 rates, only after determining that it is the only course possible to ensure our plans remain sustainable,” said Kaiser spokeswoman Laura Lott. “Covering thousands of previously uninsured people without knowing their health status creates uncertainty. Now that the actual costs are known, we have to adjust to compensate.”
HMSA, the state’s largest health insurer, had originally proposed an average 49.1 percent rate hike — the highest it ever requested — for more than 20,000 members in ACA plans next year. Kaiser originally asked for an 8.7 percent rate increase, but amended the request after learning of additional costs associated with the health care law. Kaiser insures about 16,000 through Obamacare.
“(Obamacare) is driving up the cost for acquiring health insurance, and this is where the law has failed,” said Paul Tom, principal of Benefit Plans Solutions Inc., a benefit consulting firm for large employer groups. “Obamacare hasn’t cut the cost of health care. It has raised the cost of health care, especially for the small groups. The consumer today is only beginning to feel the impact of what Obamacare is bringing to the table in terms of cost. Obamacare put another tax on insurance companies which, in effect, is passed back onto the consumer.”
Tom added, “In the beginning they (consumers) only saw reforms which were put on the insurance companies. Those are good things, but what they didn’t recognize is the cost associated with that. All it did was institute reforms, add additional coverage, make sure everyone is covered, but did nothing to reduce the costs.”
HMSA spokeswoman Elisa Yadao said its premium increase affects about 3 percent of the members who buy HMSA individual plans.
“It does not apply to you if you get your health plan from your employer, have an Akamai Advantage plan, or a pre-ACA plan (sometimes referred to as a grandmothered or grandfathered health plan),” she said.
In 2015, Hawaii’s ACA health premiums for individual plans were among the lowest nationwide at an average cost of $289.64 before Obamacare tax credits or subsidies, according to a report by the Centers for Medicare & Medicaid Services. By contrast, average monthly premiums in Wyoming, the most expensive state to purchase health insurance, were $522.73.
The new premiums for individual plans take effect Jan. 1. Open enrollment begins Nov. 1. Individuals who purchased coverage this year through the Hawaii Health Connector, the state’s troubled health insurance exchange, must re-enroll for 2016 through the federal website, healthcare.gov.
