The fact is nobody knows what is going to happen in 2015.
Have 2014 premiums been set to absorb the unknown risk of new enrollees? Is there a sufficient spread of risk among the healthy and unhealthy insured? Actuaries don’t have all the information they need to set 2015 premiums by the end of May.
Predictions for increases range from 6% to 8% to double digits. Even at the low end of estimates, the rate of increase is triple general inflation. Regardless, with only a few months of actual claim experience for guidance, setting 2015 premiums will be almost as much of an educated guess as was 2014. And then there is the political factor. How much pressure will be placed on insurers to hold down 2015 increases to be announced before November elections?
But in the short-term insurance companies have limited financial risk. As Kaiser Health News reports:
Even if carriers signed more chronically ill customers this year than planned, the health law includes “reinsurance” and other safety valves designed to keep high-cost members from pushing up rates.
But you see that reinsurance does not change the claims experience, it merely postpones the ultimate impact of high health care costs with the short-term costs being absorbed by taxpayers and employers who must contribute to the reinsurance fund.
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