Georgia Insurance Rates Spike Under Obamacare

Georgia insurance commissioner asks Sec. Sebelius to explain rate increases

July 30, 2013

Health insurance rates in Georgia are rising by up to 198 percent under Obamacare, the Georgia Insurance Commissioner said in a letter to the Department of Health and Human Services (HHS) on Monday.

States are required by the Affordable Care Act to report new insurance premium rates for state exchanges run by the federal government by the end of July.

Commissioner Ralph Hudgens in his letter asked HHS Secretary Kathleen Sebelius to extend Georgia’s deadline for reporting the insurance rates by one month to give his office more time to investigate and approve the new, higher rates.

"Georgia consumers cannot afford these massive rate increases," Hudgens wrote to Sebelius.

The Georgia insurance department compared the cost of insurance within the exchanges to what people pay now for similar coverage, and the rates were going up for every age group, said Jay Florence, an insurance department official under Hudgens.

For an average 25 year-old male, premiums are set to rise 85 to 198 percent within the exchanges, while for a 45 year-old male, premiums will rise 40 to 100 percent, Florence said. A 64 year-old male will pay 18 to 48 percent more under Obamacare’s regime.

"The delay is simply trying to give the administration an opportunity to explain that and maybe explain what our actuaries weren’t able to determine, which is that these rates are excessive," he said.

Hudgens requested that Sebelius respond by end of business today. As of 4:30 p.m. Tuesday, HHS had not responded, according to another official in the commissioner’s office. HHS did not return a request from the Washington Free Beacon for comment.

Healthcare experts pointed to several reasons that the premiums for individual plans on the exchanges are rising.

One is the "age rating," which requires that insurance companies charge no more than three times what they charge younger people. Without this restriction, insurance companies would likely charge five times as much, which means that the restriction will lower prices for the elderly but raise them for younger people.

"That in and of itself would have a direct, almost mechanical impact on rates," said Ed Haislmaier, a health care expert at the Heritage Foundation.

Obamacare also increases the minimum amount insurance companies must pay for procedures, driving up premiums, Haislmaier said. He compared this rule to mandating that everyone upgrade their plane ticket to first class and requiring everyone to pay for the extra space.

There are some states, such as New York, that will see price reductions, noted James Capretta, a health policy expert at the Ethics and Public Policy Center. But these are the one that have "already pretty much destroyed the individual market" through prior healthcare reforms, he said, and other states with intact markets will see price increases.

"I have no reason to question their numbers," Capretta said. "It’s going to be a big problem."

Georgia is not the first state to make such an announcement. Indiana has already announced that insurance rates are rising 72 percent for an individual plan and 8 percent for a group plan.