Insurers, Pushing for Higher Rates, Challenge Key Component of Health Law
By ROBERT PEAR
JULY 16, 2016 - The New York Times
WASHINGTON
— For several years, the Obama administration has urged state insurance
regulators to use tools provided by the Affordable Care Act to hold down health
care premiums.
Now
federal officials will have a chance to practice what they preach as they
confront big increases proposed in several states where they are responsible for
reviewing rates.
Federal
officials defer to the insurance commissioners in 46 states deemed to have
geffective rate reviewh programs. But in Missouri, Oklahoma, Texas and Wyoming,
the federal government is in charge of reviewing rates.
And
those reviews create an exquisite political challenge, spotlighting a pocketbook
issue that affects millions of voters.
In Texas, Blue Cross and Blue Shield is requesting rate
increases of nearly 60 percent for 2017. In Oklahoma, Blue Cross and Blue Shield
has proposed increases that average 49 percent. And in Missouri, Humana has
filed for a 34 percent increase. All three carriers say they have lost money on
many policies sold to individuals and families under the Affordable Care
Act.
Such large requests are not
typical and will test the rate review process, described by the Obama
administration as one of the most important consumer protections in the
Affordable Care Act.
Federal officials have urged states to be aggressive in
reviewing rates, but it is not clear how aggressive federal officials will be.
Michael A. Rhoads, the deputy commissioner of the Oklahoma
Insurance Department, said he doubted that federal officials would
significantly pare back rates requested in his state, given that insurers had
lost money on their exchange business and several had left the Oklahoma
marketplace.
The political calendar puts pressure on the administration
to rein in rates. The next open enrollment period starts Nov. 1, and insurers
will be notifying consumers of rate increases in the weeks before Election Day,
Nov. 8.
Donald J. Trump, the presumptive Republican presidential
nominee, regularly cites high premiums as evidence of the lawfs failure. gThe
numbers are astronomical,h he said at a rally this month.
But administration officials say the gsticker priceh does
not matter for consumers because most people in the public insurance exchanges
receive subsidies to help pay premiums, and they can also shop for less
expensive insurance.
Among people receiving subsidies, the average
beneficiaryfs share of the premium rose by just $4 a month, to $106 a month in
2016, said Kevin J. Counihan, the chief executive of the federal insurance
marketplace.
Gregory A. Thompson, a spokesman for Blue Cross and Blue
Shield plans in five states, including Oklahoma and Texas, said the reason for
the big rate requests was simple. gItfs underlying medical costs,h he said.
gThatfs what makes up the insurance premium.h
For every dollar in premiums collected last year, Blue
Cross and Blue Shield plans say they paid out $1.26 on claims in Texas and $1.38
in Oklahoma. This, they say, is not sustainable.
The Obama administration has
repeatedly said proposed rate increases are less worrisome than they appear
because they are often reduced in the review process. Those reviews, coupled
with larger subsidies in the form of tax credits, mean gindividuals are not
seeing the increases,h said Jason Furman, the chairman of the White
House Council of Economic Advisers.
The lawfs opponents are unconvinced.
gThe subsidy doesnft change the actual cost,h said
Representative Mike Kelly, Republican of Pennsylvania. gAt the end of the day,
somebody still has to pick up the tab, and thatfs the taxpayer.h
Many people buying insurance on their own do not receive
subsidies. The Congressional
Budget Office estimates
that 12 million people will receive premium tax credits next year. But it says
that an equal number — three million on the exchanges and nine million buying
insurance outside the exchanges — will have to pay the full, unsubsidized
price.
While the higher premiums proposed for 2017 in Missouri,
Oklahoma and Texas do not reflect a national trend, they are not isolated
examples, either.
Humana is seeking a 39 percent increase in Michigan,
according to data posted by the State
Insurance Department. The Oregon insurance commissioner recently approved a
24 percent increase for Providence Health Plan, which has the largest enrollment
of any carrier in the statefs individual insurance market. The largest insurer
in Tennessee, Blue Cross and Blue Shield, has requested rate increases averaging
63 percent, according to the state insurance commissioner. Blue Cross and Blue
Shield of North Carolina, which raised individual rates by an average of 32.5
percent this year, has requested a further increase of 18.8 percent for
2017.
In Wyoming, the proposed rate increases are relatively
modest, less than 10 percent. But Wyoming already has some of the highest rates
in the country, with premiums for a benchmark plan second only to those in
Alaska, among states using HealthCare.gov.
Federal and state officials and insurers point to several
factors pushing rates higher. Prescription drug costs are surging, they say. And
two temporary programs to stabilize premiums, by compensating insurers with
sicker patients and high claims costs, are ending.
But, Mr. Counihan said, gthere is not any monolithic or
consistent level of rate increases nationally.h
In a study of premiums in 2015-16,
Linda J. Blumberg, a health economist at the Urban
Institute, a nonprofit research organization, found that grates of increase
vary tremendously across states and across rating areas within states.h
Jan M. Graeber, the chief health actuary at the Texas
Department of Insurance, said her agency reviewed proposed rates for
compliance with Texas law, which says rates must be reasonable and adequate, but
not excessive or gunfairly discriminatory.h In many cases, Ms. Graeber said,
Texas officials have found that the companiesf actual claims and losses were
higher than anticipated, supporting rate increases on their individual health
plans, many of which will be sold on the federal marketplace.
The federal government and Texas often review rates at the
same time, Ms. Graeber said, but gwe donft make recommendations to federal
officials on their review process or anything like that.h
Gov. Jay Nixon of Missouri signed a bill this month that
authorizes the state to review rates, starting with insurance contracts that
take effect in 2018.
Consumer groups applauded the change. gPeople in the Missouri Department of Insurance know a lot
more about the Missouri market than people in Washington,h said Jennifer G.
Bersdale, the executive director of Missouri
Health Care for All, a grass-roots group.