By Shelby Livingston
May 7, 2018 - Modern Healthcare
Health insurers are seeking lofty rate hikes for 2019
individual coverage as they grapple with new obstacles in the Affordable Care
Act marketplace, including the zeroed-out mandate penalty and the potential
influx of skimpy insurance policies.
Maryland and Virginia are the first
states to announce the rates filed by insurance companies for 2019 plans. The
requests, though not final, offer an early look at what other insurers may be
planning across the country.
In Maryland, the two insurers selling
individual insurance plans on the ACA marketplace are asking for an average rate
increase of about 30% for 2019 coverage. That would amount to an average monthly
premium of about $592 per member, compared with $449 per month in
2018.
Nearly 212,000 people are insured in individual plans on and off
the exchange in Maryland this year.
Maryland Insurance Commissioner Al
Redmer said Monday that those rates could come down if the federal government
approves the state's soon-to-be-submitted application for a 1332 waiver and
reinsurance program to subsidize the medical claims of high-cost patients,
though he wouldn't speculate as to how much.
"We are at a place in the
individual market where any increase at all creates stress in the marketplace,"
Redmer said during conference call with reporters. "We have over the last number
of years seen losses that are unsustainable which have resulted in premium
increases that are unsustainable. We have folks in Maryland that are struggling,
that are trying to do the right thing and they are paying more for their health
insurance than they are for their mortgage."
CareFirst Blue Cross and
Blue Shield requested an average rate increase of 18.5% for its HMO plan and
91.4% for its PPO plan. The bulk (90%) of CareFirst's 138,000 Maryland
individual plan members are enrolled in HMO coverage. Kaiser Foundation Health
Plan, which covers 73,700 individual members in the state, asked Maryland
regulators for a rate increase of 35%.
CareFirst CEO Chet Burrell on
Monday said rate requests in Maryland could be reduced by as much as 20% to 30%
if a reinsurance program is approved.
Burrell said CareFirst's requested
rate hikes are necessary because the pool of people signing up for individual
insurance plans continues to shrink and grow sicker. Enrollment in Maryland's
individual market has fallen to 211,000 in 2018 from 243,000 the year before,
and will likely continue to decrease in 2019.
As rates have increased
over the years, healthier enrollees opted to forgo coverage, leaving the sicker,
costlier members behind. Trump administration actions, including the 2019
zeroing out of the mandate penalty, only exacerbated the problem by undermining
enrollment of younger, healthier members, Burrell said. CareFirst expects to
have lost about $476 million on individual plans in Maryland through 2018. In
Virginia, the company has lost $59 million but expects to break even in
2018.
"The rates, as high as they've been and as steeply as they have
increased, have not kept up with how costly it is to take care of people who are
as sick as the population involved," Burrell said.
About 5% of
CareFirst's requested rate hikes can be attributed to the zeroing out of the
individual mandate penalty, according to the Maryland insurance department.
Kaiser didn't specify how much of its rate request was driven by the individual
mandate penalty. And neither of the two Maryland insurers raised rates because
of the federal administration proposal to expand access to skimpy short-term
medical plans, likely because Maryland caps the sale of those plans to three
months—the current federal limit.
Meanwhile, Virginia insurers asked for
a wide range of rate increases. CareFirst is seeking a 26.6% rate hike for its
HMO plans in the state, and 64.3% for its PPO plans for the same reasons as its
Maryland rate increase requests.
Cigna Corp. filed for a 15% increase;
Kaiser asked for a 32.1% increase for its individual plans; and Piedmont
Community HealthCare requested an 18.3% rate increase.
Some Virginia
rate requests were lower. Anthem's HealthKeepers subsidiary asked to increase
2019 rates for its on- and off-exchange plans by 5.6% on average, while Optima
is seeking to lower rates by an average 1.9%.
Last year, individual
insurance rates went up about 30% over 2017 rates largely
because of the pervasive uncertainty over the future of the exchanges as
congressional Republicans worked to repeal and replace the ACA. The Trump
administration's decision to stop making cost-sharing reduction payments in the
fourth quarter of 2017 also led to large premium increases for 2018 coverage,
but actuaries say that was a one-time adjustment and won't affect 2019
rates.
Though repeal efforts fell flat, questions remain about how many
people will enroll in individual coverage in 2019 and how sick and costly that
population will be. The elimination of the individual mandate penalty and the
extension of short-term medical plans to a maximum of 364 days will likely be
the biggest drivers of 2019 rates.
The Congressional Budget Office
projected that premiums for the most popular silver plans on the ACA exchanges
would jump an average 34% next year. The left-leaning Urban Institute has
estimated that eliminating the individual mandate penalty, along with expanding
short-term medical plans, would increase individual premiums 18.2% on average in
states that do not restrict short-term plans.