Rising medical costs, not Obamacare, caused most of the large premium hikes in 2013, according to a new Commonwealth Fund study.
Most of Obamacare’s major provisions begin only in 2014, but some early pieces affected the 2013 market. Researchers found that, of insurers requesting rate increases of 10 percent or more, only about half attributed any portion of the increase to those early Obamacare provisions.
Those insurers said new preventive and contraceptive services for women averaged 0.8 percent of the increases, and Obamacare taxes and fees averaged 1.5 percent.
“What we found is that these larger rate increases were driven by rising medical costs,” said researcher Michael J. McCue of Virginia Commonwealth University. The study is described as the first ever to take a national look at the explanations insurers file with federal and state authorities to justify large rate increases.
Other notable findings:
• Among insurers with large rate increases, nonprofits sought lower increases than publicly traded companies, by an average of $121 in the individual market and $180 in the small-group market. The difference was attributed to smaller increases in administrative costs and profits.
• Average annual premium increases among carriers with large rate increases were $648 in the individual market and $729 in the small-group market. Insurers generally attributed the entire amount of rate increases in the individual market to higher medical expenses. In the small-group market, insurers reported that medical costs accounted for 72 percent of requested rate increases.
• Insurers attributed more than half of the average medical expense increase to higher per unit costs for services in both the individual market (57 percent) and small-group market (58 percent). Twenty-six percent of expected medical cost increases in the individual market and 31 percent in the small-group market were attributed to increased use of services.
According to the study, between 4 percent and 5 percent of consumers in the individual and small-group markets were affected by rate increases of 10 percent or more nationally between July 2012 and June 2013. State regulators were somewhat more likely to approve increases than federal regulators, who reviewed filings for states that did not review filings themselves.