Get ready for even higher health care costs.
A new survey of health insurance brokers shows that commercial insurance rates are going to rise “significantly” in 2014.
The research team at investment bank Morgan Stanley surveyed 131 brokers, finding that December 2013 rates are rising in excess of 6% in the small group market, and 9% in the individual market.
The spike in the quarterly-reported rates for annual premiums on new or renewing contracts is being attributed to the continued implementation of Obamacare rules, as well as new Obamacare taxes and fees that are being assessed on plans this year.
The December 2013 rate hikes are the largest reported since Morgan Stanley’s research team first started conducting the quarterly surveys of brokers in 2010. In prior quarters, the average quarterly reported rate increases never rose above 3% over the preceding period.
On top of this, health plans are also predicting higher cost trends in 2014, after years of stabilization (much of it attributable to the economic downturn, which reduced medical utilization rates). These higher cost trends were also among the reasons health plans cited for their December rate increases.
According to the survey, Aetna and United are increasing insurance rates in excess of 10%. Commercial carriers such as United are already on record attributing the bulk of their increased healthcare costs to new, Obamacare-related provisions.
Among the states seeing the highest annualized rate hikes (for the full 2013 year) in the individual market are Connecticut, which is averaging a 37% increase; Florida (42%); Illinois (33%); Michigan (39%); and Minnesota (35%).
Among the states with the biggest annualized spike in the small group rates are Delaware, which is averaging a 35% increase; Michigan (30%); and Minnesota (50%).
These rate increases have broad implications. Federal Reserve Board Member Jeffrey Lacker said today that the Fed has its eye on these costs.
Lacker said that he expects a “lot of turmoil” in the healthcare industry, and that the Fed will be watching how Obamacare unfolds.
In a speech to the Greater Raleigh Chamber of Commerce Friday afternoon he said, “I think the Affordable Care Act is something that we are watching very closely because it’s something that could well have a substantial economic impact.”
In other words: You can’t tap the average family by $2,000 or $3,000 in additional health care costs and not expect some macro impacts.