Health insurance companies seek big rate increases for 2016
By Robert Pear, CNBC
(CNBC) WASHINGTON - Health insurance companies around the country are seeking rate increases of 20% to 40% or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected. Federal officials say they are determined to see that the requests are scaled back.
Blue Cross and Blue Shield plans — market leaders in many states — are seeking rate increases that average 23% in Illinois, 25% in North Carolina, 31% in Oklahoma, 36% in Tennessee and 54% in Minnesota, according to documents posted online by the federal government and state insurance commissioners and interviews with insurance executives.
The Oregon insurance commissioner, Laura N. Cali, has just approved 2016 rate increases for companies that cover more than 220,000 people. Moda Health Plan, which has the largest enrollment in the state, received a 25% increase, and the second-largest plan, LifeWise, received a 33% increase.
Jesse Ellis O'Brien, a health advocate at the Oregon State Public Interest Research Group, said: "Rate increases will be bigger in 2016 than they have been for years and years and will have a profound effect on consumers here. Some may start wondering if insurance is affordable or if it's worth the money."
President Obama, on a trip to Tennessee this week, said that consumers should put pressure on state insurance regulators to scrutinize the proposed rate increases. If commissioners do their job and actively review rates, he said, "my expectation is that they'll come in significantly lower than what's being requested."
The rate requests, from some of the more popular health plans, suggest that insurance markets are still adjusting to shock waves set off by the Affordable Care Act.
It is far from certain how many of the rate increases will hold up on review, or how much they might change. But already the proposals, buttressed with reams of actuarial data, are fueling fierce debate about the effectiveness of the health law.
A study of 11 cities in different states by the Kaiser Family Foundation found that consumers would see relatively modest increases in premiums if they were willing to switch plans. But if they switch plans, consumers would have no guarantee that they can keep their doctors. And to get low premiums, they sometimes need to accept a more limited choice of doctors and hospitals.
Some say the marketplaces have not attracted enough healthy young people. "As a result, millions of people will face Obamacare sticker shock," said Senator John Barrasso, Republican of Wyoming.
By contrast, Marinan R. Williams, chief executive of the Scott & White Health Plan in Texas, which is seeking a 32% rate increase, said the requests showed that "there was a real need for the Affordable Care Act."
"People are getting services they needed for a very long time," Ms. Williams said. "There was a pent-up demand. Over the next three years, I hope, rates will start to stabilize."
Sylvia Mathews Burwell, the secretary of health and human services, said that federal subsidies would soften the impact of any rate increases. Of the 10.2 million people who obtained coverage through federal and state marketplaces this year, 85% receive subsidies in the form of tax credits to help pay premiums.
In an interview, Ms. Burwell said consumers could also try to find less expensive plans in the open enrollment period that begins in November. "You have a marketplace where there is competition," she said, "and people can shop for the plan that best meets their needs in terms of quality and price."
Blue Cross and Blue Shield of New Mexico has requested rate increases averaging 51% for its 33,000 members. The proposal elicited tart online comments from consumers.
"This rate increase is ridiculous," one subscriber wrote on the website of the New Mexico insurance superintendent.
In their submissions to federal and state regulators, insurers cite several reasons for big rate increases. These include the needs of consumers, some of whom were previously uninsured; the high cost of specialty drugs; and a policy adopted by the Obama administration in late 2013 that allowed some people to keep insurance that did not meet new federal standards.
"Healthier people chose to keep their plans," said Amy L. Bowen, a spokeswoman for the Geisinger Health Plan in Pennsylvania, and people buying insurance on the exchange were therefore sicker than expected. Geisinger, often praised as a national model of coordinated care, has requested an increase of 40% in rates for its health maintenance organization.
Insurers with decades of experience and brand-new plans underestimated claims costs.
Monday, August 21 2017 4:21 AM EDT2017-08-21 08:21:48 GMT
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