Arizona faces steepest Obamacare hike in U.S.
Arizona residents can expect to see the largest rate increases in the nation when open enrollment for Obamacare begins next week, but advocates say those increases should be offset by similarly large increases in tax credits for consumers.
A Monday report by the Department of Health and Human Services said a 27-year-old Arizona resident with a mid-range insurance plan in the Affordable Care Act marketplace could see a 116 percent increase in premiums next year, more than four times the national average of 25 percent.
But that’s before the tax credit the vast majority of consumers get under Obamacare to help them pay for their coverage. Once that is applied, according to department estimates, about 78 percent of Arizonans in the health care marketplace could end up paying less than $100 a month for insurance – with 70 percent paying less than $50, according to HHS.
While benchmark premiums will increase next year, so will the tax credits that will help compensate, according to the report.
“Most people who purchase through this market are doing so so that they can get that subsidy,” said Cynthia Cox, an associate director of health reform and private insurance at the Kaiser Family Foundation.
Cox said it “would be less common” for Arizona residents to pay the full premium price.
HHS Secretary Sylvia Burwell said in a statement Monday that not only could currently uninsured Arizonans also qualify for subsidies but so “could 33,000 Arizonans currently paying full price for off-Marketplace coverage.”
Higher premiums come as no surprise in Arizona, where filings with the state Department of Insurance posted notice of double-digit increases for customers of Blue Cross and Centene – the only two health insurance companies still participating in the exchange in the state.
The six other companies that had offered coverage in Arizona pulled out of the exchange for next year after suffering financial losses in the marketplace.
Cox blamed the losses, and the subsequent increase in premiums that Arizona residents face next year, on the fact that the state had “abnormally low” premiums in 2016.
Insurers didn’t know where to set prices when the marketplace opened in 2013 because “they had very little information to work with when setting these premiums, this was the first year that the newly required market was going to be in place,” she said.
Arizona was among states that had “some of the lowest premiums in the country and were abnormally low in the first couple of years. Now premiums need to increase in order for insurers to cover their costs,” Cox said.
While they saw the shakeout coming, health policy experts said the response of the consumers to the higher prices could have a lasting effect on the success of Obamacare.
“This open enrollment period could be pivotal for the future of the marketplace,” said Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation. “One area of uncertainty is how consumers will react to these premium increases.”
Sen. John McCain, R-Arizona, said in a statement Monday that the expected rate hikes show that Obamacare is an “unsustainable system that places an unfair financial burden on families and small businesses.”
“While real families suffer the consequences of higher costs, less flexibility in coverage and less choice, Democrats continue to trumpet the ‘successes’ of Obamacare and refuse to acknowledge the harm being caused by this fatally flawed health care law,” McCain’s statement said.
But Rep. Ann Kirkpatrick, D-Flagstaff, said McCain “isn’t being truthful in his criticism.” She, like many Democrats, said the health care law needs to be reformed, not repealed.
“John McCain and his allies have refused to institute any substantial rate review process in Arizona, which impacts hardworking families,” said Kirkpatrick, who is challenging McCain for his Senate seat. “His only solution for health care would endanger coverage for thousands of Arizonans, add $187 billion to the deficit, and increase costs on seniors, women, and working families.”
By Allie Bice, Cronkite News