Insurers are no longertreading lightly with premium increases.

Saying that they are paying out more in medical costs than theyare receiving in premiums from their members, insurers aredramatically hiking rates for the plans they offer through thefederal and state Affordable Care Actmarketplaces.

Some of the biggest proposed increases were recently highlightedin The New York Times:

• Blue Cross Blue Shield of Tennessee: 63 percent.

• Blue Cross Blue Shield of Texas: 60 percent.

• Blue Cross Blue Shield of Oklahoma: 49 percent.

• Humana in Michigan: 39 percent.

• Humana in Missouri: 34 percent.

For now, those are merely requests that have to be approved bygovernment regulators. In 46 states, that task is left to the stateinsurance commissioner, but in Oklahoma, Texas, Wyoming andMissouri, the Obama administration has determined that there is notsufficient state oversight of rate hikes, and so it will be federalregulators who will have the final say on premiums.

The Obama administration is ramping up its efforts to keep therate hikes as low as possible. In the spring it announced it woulddole out millions of dollars to state insurance commissioners tohelp them add staff for the purpose of scrutinizing the premiumincreases requested by insurers.

For the administration, major rate hikes present two distinctproblems. First, they threaten to undermine or weaken the ACAstructurally, by prompting unhappy customers to ditch their plans.Second, they pose a political threat to Democrats in general andHillary Clinton in particular, since the presumptive Democraticnominee has fully embraced the ACA in her campaign against DonaldTrump, who has predictably seized on news of rate hikes to denounceObamacare as a failure.

The Obama administration is eager to point out, however, thateven dramatic rate hikes won’t necessarily hit the most vulnerablecustomers hard. The great majority of Obamacare policyholdersreceive premium tax credits and a large portion receive additionalsubsidies that limit their out-of-pocket expenses. For the lattergroup, monthly costs only rose $4 last year, despite much greateroverall premium increases.

One problem that will handicap the administration’s attempts tokeep premiums down is the elimination of funding for “riskcorridors,” which were intended to help insurers absorb losses inthe first years of the ACA. Sen. Marco Rubio championed theelimination of the program in an end of year budget compromise,saying it amounted to a “bailout” of bad business decisions.

Finally, as long as the cost of prescription drugs continues torise, it is hard to imagine health insurance premiums will not aswell. A report in The Wall Street Journal found that manymajor pharmaceutical companies are attributing greater sales oftheir drugs to increased prices.

As premiums increase and drug costs increase, policymakers arefaced with competing arguments over how to reduce the overall costof care to consumers. Insurers seeking to merge — Aetna and Humana; Anthem andCigna — argue that their mergers will help themnegotiate better prices with drug companies and providers, a claimthat consumer advocates find unconvincing but some regulators mayfind appealing.