Featured Health Business Daily Story, Sept. 25, 2015

Thumped by Costly New Members, Plans Are Approved for Big Hikes

Reprinted from INSIDE HEALTH INSURANCE EXCHANGES, a hard-hitting newsletter with news and strategic insights on the development and operation of public and private exchanges. Sign up for a $62 two-month trial subscription today.

By ,
September 2015Volume 5Issue 9

Information about premium rates for the 2016 plan year continue to trickle out from state insurance departments. Some state regulators have granted significant rate increases to carriers that reported sizable losses due to higher-than-anticipated medical and prescription drug usage.

Case in point: Pennsylvania-based Blues plan operator Highmark Health said on Sept. 3 that it lost $318 million on its exchange-based plans during the first half of 2015. Company officials blamed the loss on greater-than-expected demand for medical treatments for cancer, hepatitis and heart failure, which were more common among exchange enrollees compared with those covered outside of the exchange.

Highmark, which has about 379,000 exchange members in Delaware, Pennsylvania and West Virginia, is seeking substantial rate increases for the 2016 plan year.

Some carriers were approved for increases that were higher than requested, and a few will offer rates that are lower than they were a year ago, according to data released by some state insurance departments.

United Gets Biggest Increase in Florida

The Florida Office of Insurance Regulation (FOIR) on Aug. 26 said premiums for 2016 individual major medical plans — sold on and off of the state’s federally facilitated exchange — would increase by an average of 9.5% over 2015 prices. Nineteen insurance carriers submitted rate filings in May.

UnitedHealth Group was approved for an average 16.2% rate hike, which was slightly lower than the increase the company had proposed. In 2016, people who enroll in one of UnitedHealth’s exchange plans will pay an average of $463 a month for non-subsidized coverage.

Aetna Inc. was approved for a 13.9% rate hike after asking for a 20.9% increase. Aetna members will pay an average of $381 a month for non-subsidized coverage. Blue Cross and Blue Shield of Florida, by contrast, had asked for a 4.3% increase, but FOIR approved an average 8.9% hike. The average individual policy from the Blues plan will cost $472 a month before subsidies.

Iowa Approves 19.8% Increase for Coventry

On Aug. 25, the Iowa Insurance Division approved a 19.8% average rate increase for Qualified Health Plans (QHPs) sold by Coventry Health Care of Iowa. The subsidiary of Aetna Inc. had requested an average 17.8% rate increase last spring. Between 35,000 and 47,000 Iowans are enrolled in a QHP from Coventry.

The 2016 rates are based on the insurer’s experience and projected member movement from the entire insured and uninsured population. Blues plan operator Wellmark, Inc. — one of only two Blues plans that don’t sell coverage on a public insurance exchange — was approved for an average 26.5% rate increase for its ACA-compliant, off-exchange policies that cover about 23,000 people.

A spokesperson for the Iowa Dept. of Insurance said the demise of CoOportunity, a Consumer Operated and Oriented Plan (CO-OP) that was liquidated in early 2015, didn’t have a quantifiable impact on rate increases for 2016 (HEX 1/15, p. 1).

Premiums for Michigan Plans to Grow 11.4%

The Michigan Dept. of Insurance and Financial Services (DIFS) on Aug. 18 approved the Michigan Blues plan’s requested 11.4% average premium increase for 14 individual products sold inside and outside of the state’s federally run insurance exchange. Those products collectively cover about 138,000 lives. DIFS also approved a 9.7% increase for 26 individual products through Blue Care Network of Michigan, an HMO. Those plans collectively cover about 172,000 lives.

Arkansas Holds Rate Hikes to 7.15%

The Arkansas Insurance Dept. (AID) on Aug. 25 approved an average 7.15% rate hike for individual products sold by Arkansas Blue Cross and Blue Shield through the state’s federally facilitated exchange for the 2016 plan year. It also approved a 3.01% average increase for its small-group plans, which will be sold through a state-run Small Business Health Options Program (SHOP).

All rate increases approved by AID were below 9%. In 2015, the Arkansas Blues plan competed with two other carriers on the state’s exchange. UnitedHealth Group will join the group during the open-enrollment period in November.

CareFirst Will Push Rates 26% Higher

In Maryland, premiums for CareFirst, Inc.’s exchange-based plans will increase by an average of 26%, the Maryland Insurance Administration said Sept. 4. The Blues plan operator’s policies cover more than 95,000 out of 125,000 people who purchased coverage through Maryland’s state-run exchange for 2015.

On the small-group side, by contrast, CareFirst of Maryland will cut its rates 16.1%, while its BlueChoice products will be an average of 3.1% lower. In the small-group market health insurance rates overall will decrease by 1.8% in 2016. Eleven companies filed to sell in the small-group market next year. Approximately 4.2% of Marylanders are in the small-group market and 3.9% are in the individual market.

All Savers Insurance, a UnitedHealth Group subsidiary, will reduce its rates by an average of 3.2%, and Cigna Corp. will cut its rates by an average of 2.9%. Kaiser Foundation Health Plan of the Mid-Atlantic States will increase premiums by an average of 4.8% and Evergreen Health Cooperative will boost premiums by an average of 9.7%.

Tennessee Blues Plan Boosts Rates 36.3%

On Aug. 21, Tennessee Dept. of Commerce and Insurance Commissioner Julie Mix McPeak approved BlueCross BlueShield of Tennessee’s 36.3% average rate increase for individual products to be sold inside and outside of the state’s federally run exchange for the 2016 plan year. The Tennessee Blues plan has more than 70% of the market.

Cigna Corp.’s premiums, by contrast, will increase just 0.4% in the state after the company switched from a PPO product to an exclusive provider organization (EPO) in two of three areas. Humana Inc. had sought a 15.8% rate increase, but was approved for a 5.8% hike after it withdrew Platinum-level plans from its initial submission. “The 2016 rates are set as low as feasibly possible in order to maintain a viable individual marketplace,” she said in an email to HEX sister publication The AIS Report on Blue Cross and Blue Shield Plans.

In July, HealthCare.gov CEO Kevin Counihan wrote a letter to state regulators urging them to approve only moderate rate increases. McPeak says that the request didn’t influence the rate-approval process.

Blues Plan Pulls Out of New Mexico

Blue Cross and Blue Shield of New Mexico, a subsidiary of Health Care Service Corp. (HCSC), will not sell QHPs through that state’s exchange for the 2016 plan year, the Office of the Superintendent of Insurance said Aug. 11. The Blues plan, which covers about 35,000 people through New Mexico’s state-based exchange, says it lost $19.2 million on exchange-based plans last year (HEX 8/15, p. 1). In May, the Blues plan proposed an average 51.6% premium increase for its 2016 QHPs.

Nevada Holds Rate Hikes Below 10%

The Nevada Division of Insurance on Sept. 2 said 2016 small-group coverage rates would be an average of 5% lower compared with the 2015 plan year. People who buy individual coverage through Nevada’s insurance exchange will see an average 8.7% premium increase, while those who buy coverage outside of the exchange will pay an average of 9.6% more. Eighteen carriers compete in Nevada’s insurance market. The DOI won’t release approved rates by plan until Oct. 2. Nevada’s exchange now operates via the federal exchange platform.

© 2015 by Atlantic Information Services, Inc. All Rights Reserved.

The AIS E-Savings Club offers regular opportunities to buy AIS products and services at substantial savings. Click here to see the current specials — including a $50 discount on the all-new 20th edition of AIS’s best-selling annual resource Health Plan Facts, Trends and Data.

It's quick and easy to sign up for FREE access to AISHealth.com!

Why do I need to register?

Resources for Paid Subscribers
Not a Paid Subscriber?

Check out all of the benefits, sample issues & more!