Health and Science

Woman who ran Obamacare warns of BIG insurance prices hikes

Marilyn Tavenner's crystal ball didn't foresee the initial epic flop of when she actually ran the agency in charge of the website. Now, as an insurance lobbyist, she sees big jumps in Obamacare insurance premiums next year.

"I've been asked, what are the premiums going to look like? I don't know, because it also varies by state, market, or even within markets," Tavenner told the in an interview.

Marilyn Tavenner
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"But I think the overall trend is going to be higher than we saw in previous years. That's my big prediction," said Tavenner, who is now president and CEO of America's Health Insurance Plans, the industry's lobbying group.

Tavenner's warning of sharp hikes in insurance prices comes as insurers prepare to propose their 2017 Obamacare plan rates, and as the major insurer UnitedHealth has revealed it is exiting most Obamacare marketplaces where it has sold plans.

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Tavenner's previous job was heading the federal Centers for Medicare and Medicaid Services, the massive agency that oversees those two government-run health coverage programs.

CMS also is responsible for implementation of the Affordable Care Act, a key feature of which is the sale of often-subsidized private health insurance plans on online marketplaces including, the federally run exchange that serves 38 states. was a disaster when it launched in the fall of 2013, and was essentially unable to sign up meaningful numbers of customers in the initial month or so of open enrollment due to widespread technological problems.

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Since then, and the state-run Obamacare marketplaces have signed up millions of customers. In 2016, about 12.7 million people signed up for coverage.

Tavenner suggested her in interview that those customers, and new ones, could be hit with sticker shock when it comes to enrolling in 2017 plans, which go on sale next fall.

In the interview, she cited a number of factors that she said could lead to higher premium price hikes for next year than in prior years.

Among them, Tavenner told the site, was general increases in medical costs, as well as boosts in the prices of prescription drugs.

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Tavenner also pointed to the end, in 2017, of two of the three so-called "Three R" programs, which are designed to limit the amount of losses that insurers will incur while selling Obamacare plans.

The two programs that are going away relate, respectively, to money that insurers receive in recognition of having signed-up people who have high medical costs, and another that puts limits on losses and profits for Obamacare issuers.

And Tavenner also noted that there has been "churn" among plan customers, with some people signing up when they believe they will need health coverage and then dropping out of coverage, ending their premium payments.

"That churn increases premiums. So you have to kind of price over that," she told

But the U.S. Health and Human Services Department, which includes CMS, has been pushing back in the past week against dire predictions like those of Tavenner and others about high Obamacare price hikes.

HHS pointed to similar fears that had been raised last year, when critics suggested Obamacare customers would be hit with double-digit premium increases.

Last week, HHS issued an analysis that it said "debunks the myth that average customers experienced double-digit percentage premium increases for coverage" on the Obamacare marketplace in 2011.

The analysis found that in 2016, the average premium among customer increased 8 percent from 2015 to 2016, after taking into account the shopping that existing customers did when they selected a new plan and actual new customers.

And when the federal subsidies, or tax credits, that about 85 percent of customers receive were factored in, the average net monthly price increase was only $4, or 4 percent, the analysis found.

The report said that the initial rate filings that insurers make for a coming year "do not provide sufficient information" about what customers actually will pay in that year after they enroll. The filings don't take into account the effect of customers shopping around for better deals — which two-thirds of returning customers did — or the effects of the subsidies, the report said.

And the initial filings also aren't necessarily what the final prices will look like. The report noted that under the rate-review process, states can put pressure on insurers to lower their proposed rates, or in some case can actually lower the rates themselves.

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Another factor that can mitigate high rate increases is that face that because of the way Obamacare subsidies were calculated, the amount of financial aid a customer get rises if the price of so-called "benchmark" plans increases.

Administration officials also have noted that the insurance industry got almost $14 billion in new health insurance taxes delayed by a year after the industry had warned the levy would be passed along to customers in the former of higher 2017 premiums.

Asked about Tavenner's comments, HHS spokesman Ben Wakana said, "Marketplace consumers would do well to put little stock in those initial numbers" submitted by insurers.

And, he said, "averages based on proposed premium changes are not a reliable indicator of what typical consumers will actually pay because tax credits reduce the cost of coverage for the vast majority of people, shopping gives all consumers a chance to find the best deal, and public rate review can bring down proposed increases."