Source: Modern Healthcare
It’s a tricky time to be an insurance commissioner.
A sudden unsteadiness in the individual health insurance market dominated by the exchanges has placed state regulators in a tight spot as they seek to simultaneously keep premiums affordable and reckon with the financial conditions and federal policy changes that led insurers to seek large rate hikes for 2026.
On the one hand, officials are working to ensure insurance companies are consistent in their assumptions about the size and make up of the exchange market next year in recognition of rising costs and unfavorable policy changes. On the other hand, they are scrutinizing premium increase requests to prevent excessive hikes.
Navigating these competing priorities can make for tense conversations with insurers. It also exposes insurance commissioners, who are elected in 11 states, and governors to public backlash.
“I am concerned that consumers will misunderstand the rate increases and believe that I’m to blame,” said Oklahoma Insurance Commissioner Glen Mulready (R), who cannot run for reelection next year because of term limits.
In states such as Arkansas, appointed insurance commissioners can face pressure from their bosses to constrain rate hikes.
“Arkansas’ insurance commissioner is required to disapprove of proposed rate increases if they are excessive or discriminatory, and these are both,” Gov. Sarah Huckabee Sanders (R) said in a news release Aug. 6. “I’m calling on my commissioner to follow the law, reject these insane rate increases and protect Arkansans.”
Arkansas Insurance Commissioner Alan McClain, originally an appointee of then-Gov. Asa Hutchinson (R) in 2020, plans to resign at the end of this month, more than two years before his term would have ended, according to media reports. McClain declined to comment.
New Hampshire Insurance Commissioner D.J. Bettencourt, whom then-Gov. Chris Sununu (R) appointed in 2023, described a similar director from Gov. Kelly Ayotte (R): “Do everything you can to keep premiums down.”
This month, Bettencourt issued a letter urging insurers to revise and reduce their rate increases. “We want to make sure that the consumer is not bearing the consequences of bad decisions that the company has made,” he said.
Some states are weighing policies that could blunt premium increases and historic cuts to federal health programs. But there’s only so much they can do, said Colorado Insurance Commissioner Mike Conway, whom Gov. Jared Polis (D) appointed in 2018.
The Colorado General Assembly is considering borrowing $100 million from the state’s unclaimed property trust to assist insurance consumers if enhanced exchange subsidies expire as scheduled at the end of the year, for example.
“We’re going to do our job and make sure that the rate increases are appropriate but, candidly, it wouldn’t matter if we disapprove this rate increase because people would still see massive, massive rate increases, right? It’s all about the loss of subsidies,” Conway said.
Despite their mandate to promote affordability, insurance regulators are also responsible for guaranteeing a market composed of stable, financially secure insurance companies.
That means they can’t simply refuse price increases despite the potential political fallout and, in fact, must take care that insurers don’t underprice, said Wesley Sanders, founder and principal consultant at the health insurance consulting firm Evensun Health.
Not only do insurers need to maintain adequate reserves, they need to have enough money to meet their obligations to the exchanges’ risk-adjustment fund. Carriers with healthier risk pools that owe rivals through the program but don’t have the money to pay them place their competitors’ finances in jeopardy.
Moving goalposts
The health insurance sector is struggling this year, largely because medical spending has outpaced projections. That portends premium increases across product lines as companies seek to restore margins.
The ordinarily routine process of submitting premium filings to state regulators is complicated this year by several factors.
Many insurers drafted their requests before President Donald Trump and Congress took steps to restrict exchange enrollment next year via the “One Big Beautiful Bill” and a final rule published in June. The nonpartisan Congressional Budget Office projects those policies will cause 2.1 million people to lose exchange coverage.
More disruption is just over the horizon if the enhanced exchange subsidies in place since 2021 disappear. If Trump and the Republican-led Congress allow those to lapse, another 4 million people would become uninsured and the remaining exchange population would be sicker and costlier to cover, according to a separate CBO analysis.
Uncertainty about Trump’s big bill and the fate of the more generous exchange tax credits forced insurers to calculate, and regulators to consider, multiple pricing scenarios, further complicating the process.
In July, insurance companies also started reporting that more enrollees than usual were signing up but not paying premiums. Financial reports from leading carriers such as Centene and Molina Healthcare also showed higher-than-expected utilization. These revelations sent insurers back to the drawing board.
Then last week, a federal court suspended elements of the exchanges final rule, forcing the Centers for Medicare and Medicaid Services to extend the exchanges filing deadline.
Skittish insurers
CVS Health subsidiary Aetna, Chorus Community Health Plans and Health Alliance have all announced plans to quit the exchanges at the end of the year.
In addition, Quartz will exit Illinois, Mountain Health Co-Op will not sell policies in Wyoming, and Elevance Health and UnitedHealth Group subsidiary UnitedHealthcare announced they will depart Colorado.
These strategic decisions about those markets are also warnings to officials in other states that rejecting premium increases could lead to more retrenchment, said Evensun Health’s Sanders.
“Consumers are going to be mad, and they’re going to be mad at everybody. The point that we’ve been making, and that will continue to make, is that we’re mad, too. I’m mad. I’m furious. But I need the federal government to step up,’” Conway said.
