It looks like health insurance rates will go up a lot next year, but not because medical inflation is high or because insurers aren’t making money under Obamacare. Mostly it’s because insurers are nervous about whether they’re going to lose the CSR subsidies that are part of Obamacare. President Trump has deliberately chosen to keep this dangling, so insurers have to raise their rate requests in case he decides to stop paying it. Insurers are also nervous about the individual mandate, which helps bring young, healthy customers into the insurance pool. Republicans have been talking about officially forbidding the IRS from enforcing it, and if that happens rates will have to go up too.
Charles Gaba has gone through the rate requests of 20 states, and he figures that these two things account for about 71 percent of the size of the rate hikes that have been requested so far. In other words, if insurers in your state are asking for a 20 percent increase, 6 percent of that is from normal causes and 14 percent is from deliberate Republican efforts to destabilize the individual market.
California’s exchanges are well run, and the state is fully committed to Obamacare. The state insurance commissioner has asked insurers to submit two rate requests for 2018—one with and one without uncertainty over CSR and the mandate—and these rate requests are set to be unveiled on Monday. It’s going to be an important bellwether.