Health plans request double-digit premium increases

By Laura Nahmias and Dan Goldberg
10:04 p.m. | Jul. 2, 2014 - Capital New York

ALBANY—New York insurance companies are looking to raise health insurance premiums by an average of 13 percent, according to proposed rates released by the state's Department of Financial Services on Wednesday.

The requests come from the 41 insurance companies operating in New York's insurance market. Last year, 16 insurers offered plans on the state's health exchange, which was created by the Affordable Care Act.

The six most popular plans on the state’s exchange requested double-digit increases in their premium rates for next year, with an average request of a 14.6 percent rate hike.

The companies cite a variety of reasons for the requests, from having a sicker pool of customers than expected, to rising medical costs. Some blame increased taxes, others fault government regulations.

The proposed rate increases signify only what the insurers would like to see, and state officials can still demand insurers accept far less than they would like.

Last year, insurers requested 9.5 percent increases in premiums for their individual plans, but the state Department of Financial Services, which regulates insurers, approved, on average, only a 4.5 percent increase. The average annual rate of increase approved by D.F.S. last year for all insurance plans, including small group and individual insurance, was 7.5 percent.

This year, Health Republic, the not-for-profit insurer consumer operated and oriented plan (COOP) that was just launched in 2014, is proposing an average overall rate increase of 15.2 percent in its individual health exchange plans, according to the company’s filings.

Health Republic was the most popular plan among those provided on the state’s health exchange, capturing 40 percent of total enrollment with its low prices.

Multiple factors led to the requested increase, Health Republic said in its filing, including increasing medical costs and utilization, declining federal support for reinsurance programs that cover the costs of insuring new individuals, and “changes to the population served based on state average Affordable Care Act marketplace enrollment.”

If the requested premium rates were approved, the cost for a platinum plan would increase from $409 per month to $475 per month, or $5,700 a year, not including subsidies. A gold plan would increase from $355 to $385, a silver plan would increase from $308 per month to $330, and a bronze plan would increase from $249 to $272.

The price of a catastrophic plan would actually decrease, from $172 per month to $151.

Health Republic has 54,900 policyholders on its individual exchange plans.

The second largest share of the individual exchange market belongs to Fidelis, the New York State Catholic Health Plan. Fidelis, which captured 17 percent of the market in 2014, is requesting an average 7.1 percent increase in its premiums for next year.

The company says its customers skewed older than they anticipated, meaning they are insuring a sicker population. To cover those costs, the company says, it needs to raise rates.

“We assumed that membership would reflect the population in existing plans,” the company told state regulators. “In fact, the population that entered the Individual market with Fidelis and with other carriers is older than anticipated. The older population alone would require a 17% rate increase.”

MetroPlus, which captured the third highest market share on the state’s exchange, and which serves only New York City residents, is requesting an average 18.5 percent increase in its premiums from last year, which would raise premiums for some customers by more than $100 per month. The price for a platinum plan under the proposed rate increase would spike from $457 per month to $585 per month. A gold plan would increase from $406 to $495, a silver plan would increase from $368 to $432 and a bronze plan would increase from $344 to $390. The cost of a catastrophic plan would go down, from $328 to $252.

MetroPlus said it projected that medical costs would rise for platinum, gold, silver and bronze plans, partly because of increases in hospital and other provider reimbursement rates. The justification for the increase also cited anticipation of a greater contribution toward the risk adjustment pool. That means the company, which captured 44 percent of the New York City market, had a far healthier pool of customers than it anticipated and as a result is expecting to have to pay into a fund that siphons money from insurers with healthier customers to those companies that have sicker customers. The Affordable Care Act created these pools to keep insurance companies from devising schemes to attract only the healthiest shoppers, who would need less medical care. 

Empire, which garnered 14 percent of the individual market, is looking to raise rates 18 percent, which would increase the cost of a silver plan from $488 to $571. The insurers claimed rising health care costs are responsible.

Emblem Health, which captured 9 percent of the market,is asking for an average 9.5 percent rate increase. The cost for a platinum plan, on average, would increase from $579 per month to $687 per month. Gold plans would increase from $489 per month to $564 per month. Silver plans would increase from $403 per month to $466 per month, and Bronze plans would go up from $348 to $405 per month. Catastrophic plan premium rates would increase slightly, from $212 to $230 per month.

MVP, which holds 8 percent of the market, asked for 19 percent average increase because "[s]ome assumptions that MVP made in setting premium rates for 2014 need significant modification, including the cost of care in the NYC rate region, the value of certain benefit plans and the expected impact of the Federal Risk Transfer Program between carriers. Another much less significant driver of premium rate increases for 2015 is the new benefit mandates for Mental Health and Substance Abuse coverage." The average cost of a silver plan would increase from $403 to $446 per month next year.