by Andrew Walden

A report issued this month by the Society of Actuaries indicates that Hawaii health insurance premiums are set to rise 12% to 21% as the Hawaii Health Exchange opens January 1, 2014.  Responding to the report, Health and Human Services Secretary Kathleen Sebelius told reporters: “As a former insurance commissioner I have watched what transparency does to a market.” 

Hawaii’s Health Exchange has been criticized for including Insurance Company representatives on its board and for being exempted from the State Sunshine Law.

Here is the rundown:  

Sebelius: Some Could See Insurance Premiums Rise

WSJ: “As a former insurance commissioner I have watched what transparency does to a market,” Ms. Sebelius said. “This is the first time ever in the history of the United States that insurance companies have to file their rates, it has to be very transparent, they have to offer the same kind of coverage without 5,000 tiny little lines and internal caps, and they have to compete for customers. And I am a believer in the market strategies that in and of itself will minimize the rate impact.”

As The Wall Street Journal reported last week, some insurers have already begun signaling they could dramatically increase prices for people buying policies in the individual market to compensate for restrictions on how they treat consumers, as well as new fees and requirements that they provide bigger benefits packages.

The Society of Actuaries, a nonpartisan professional association, has issued a new report warning that the cost of medical claims in the new individual-insurance market could rise by an average of 32% per person over the first few years the law is in place, as more people with higher medical needs get coverage, and that the impact will be very different depending on the state. Medical bills are another key factor in determining premiums.

read … The Wall Street Journal

“I have watched what transparency does to a market.”

• Transparency in Hawaii:  AARP: Health Connector Transparency Legislation Did Not Pass, Connector Should not be Funded
• Transparency in Hawaii: Exchange outside Sunshine Law
• PBN: HMSA, Kaiser on Health Exchange Board

Society of Actuaries: Cost of the Future Newly Insured under the Affordable Care Act (ACA) 

“the costs shown in the tables are at projected 2014 levels”

Figure S-1. Summary of “Ultimate” Findings- Assuming All States Expand Medicaid

State	% Uninsured Pre-ACA	% Uninsured Post-ACA Elasticity	% Uninsured Post-ACA Utility	Size of Non-Group Pre-ACA	Size of Non-Group Post-ACA	% of Non- Group in Exchange	Average Non-Group PMPM Pre-ACA	Average Non-Group PMPM Post-ACA	% Change in Non-Group PMPM
Hawaii	8.0%	3.8%	3.9%	26,584	73,534	83.8%	$374	$456	21.9%

Figure S-2. Summary of “Ultimate” Findings- Assuming No States Expand Medicaid

State	% Uninsured Pre-ACA	% Uninsured Post-ACA	Size  of Non-Group Pre-ACA	Size  of Non-Group Post-ACA	% of Non- Group in Exchange	Average Non-Group PMPM Pre-ACA	Average Non-Group PMPM Post-ACA	% Change in Non-Group PMPM
Hawaii	8.0%	4.9%	26,584	83,153	85.5%	$374	$421	12.6%

Medical Claims Costs to Rise in Individual Market under Health Law

NCPA March 27, 2013

Medical claims costs -- the biggest driver of health insurance premiums -- will jump an average of 32 percent for Americans' individual policies under President Barack Obama's overhaul, according to a study by the nation's leading group of financial risk analysts, says the Associated Press.

• While some states will see medical claims costs per person decline, the report concluded the overwhelming majority will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers.
• The disparities are striking: By 2017, the estimated increase would be 62 percent for California, about 80 percent for Ohio, more than 20 percent for Florida and 67 percent for Maryland.
• Much of the reason for the higher claims costs is that sicker people are expected to join the pool.

The report did not make similar estimates for employer plans, because the primary impact of Obama's law is on people who don't have coverage through their jobs.

The administration questions the design of the study, saying it focused on only one piece of the puzzle and ignored cost relief strategies in the law such as tax credits to help people afford premiums and special payments to insurers who attract an outsize share of the sick.

But a prominent national expert, recently retired Medicare chief actuary Rick Foster, says the report does "a credible job" of estimating potential enrollment and costs under the law, "without trying to tilt the answers in any particular direction."

Source: "Claims Costs that Drive Premiums Will Rise 32 Percent in Individual Market under Health Law," Associated Press, March 26, 2013.