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Arkansas health insurers’ proposed rate hikes for 2026 were met with shock and disdain just over a week ago.
The reaction was led by the governor, who took the drastic step of calling on the state insurance commissioner to reject the proposals from Arkansas Blue Cross & Blue Shield and Centene, which requested premium increases as high as 25.5% and 54.4%, respectively.
Steep increases, no doubt, but my question for those who were surprised is: Where have you been?
Arkansas Blue Cross posted the worst year in its 77-year history in 2024, losing $226.2 million on $2.9 billion in revenue. It is projecting another loss — albeit smaller — this year.
These rate jumps — mostly impacting those who get their coverage through HealthCare.gov or Arkansas’ Medicaid expansion program — were inevitable. Take it from business owners who went through last year’s open enrollment period, many would have been thrilled with only a 25% increase.
Some businesses threw in the towel on health care completely. Arkansas Blue Cross CEO Curtis Barnett told Arkansas Business earlier this year that 125 small groups abandoned coverage altogether this year in the face of massive premium hikes.
I’d love to give some reasons for optimism, but the situation dictates quite the opposite.
Our population is rapidly aging as baby boomers reach the age when health care costs begin to multiply.
Congress has declined to extend the enhanced tax credits for health insurance premiums enacted during the pandemic. Public policy merits aside, the credits’ sunset will have the effect of tripling premium costs and driving those who had benefited from the credits out of the insurance market. And who are these people who will be leaving the market? The healthiest ones, meaning the risk pool’s overall health will decline.
Indeed, Centene cited this in its request for a rate increase.
We’ve gotten better at treating diseases, from cancer to chronic conditions tied to obesity, but these drugs and therapies come at a cost. And we spend untold sums on keeping people alive in the intensive care unit who have no chance of getting better.
I’m eager to see what the Insurance Department’s outside actuary finds when it evaluates the new premium rates to determine whether they are reasonable. I won’t be surprised if it finds that they are. Insurers nationwide are proposing similar increases.
This is further evidence that the Frankensteined American health insurance system is fundamentally flawed. Providers, especially in rural areas, have become far too dependent on Medicaid, but the program’s reimbursement rates haven’t kept pace with actual costs of medications and treatments.
We’ve tied health insurance for most people to their employers.
The dam is showing signs of breaking, and while there are solutions worth trying, we don’t have the political will to enact them.
We’ll wish we did when the crash comes. All signs are pointing to that being sooner than later.
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