03 Jun 2014 Policies On Vermont Exchange Could Have Substantial Rate Hikes

Yesterday came news that policies on the Vermont ObamaCare exchange would likely rise, although it wasn’t reported by how much.

Today the Vermont Digger finds that Blue Cross Blue Shield of Vermont is asking to raise its premiums by an average of 9.8 percent for 2015.  Here is a chart of the requested increases:

This chart suggests that the healthier people who enrolled went for the plans with high deductibles (since they have the lowest requested increases).  But as the premiums rise faster for the other policies, healthier people will abandon them for the lower-cost high-deductible policies.  That will drive the cost of those other policies higher as the people in them will be generally sicker.  Eventually, those sicker people will gravitate to the lower-cost high-deductible plans as well. Once that happens, the high-deductible plans won’t be so “low cost” anymore.

This is similar to what we’ve seen elsewhere, with Ohio facing an average increase of 13 percent and Virginia and Washington State facing increases of just under 9 percent.

These rate hikes suggest two things:  First, in theory the ObamaCare risk corridors exist to limit premium hikes. It’s a testament to how badly designed this law is that even with the added taxpayer money from risk corridors, policyholders are facing big premium hikes.

Second is, as always, the exchanges are likely headed for a death spiral.