WASHINGTON — Health insurance
companies around the country are seeking rate increases of 20 percent
to 40 percent or more,
Blue
Cross and Blue Shield plans — market leaders in many states — are
seeking rate increases that average 23 percent in Illinois, 25 percent
in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee and
54 percent 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 percent increase, and the second-largest plan, LifeWise, received a
33 percent 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 percent 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 percent 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 percent 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 percent in rates for its health maintenance organization.
Insurers with decades of experience and brand-new plans underestimated claims costs.
“Our
enrollees generated 24 percent more claims than we thought they would
when we set our 2014 rates,” said Nathan T. Johns, the chief financial
officer of Arches Health Plan, which covers about one-fourth of the
people who bought insurance through the federal exchange in Utah. As a
result, the company said, it collected premiums of $39.7 million and had
claims of $56.3 million in 2014. It has requested rate increases
averaging 45 percent for 2016.
The
rate requests are the first to reflect a full year of experience with
the new insurance exchanges and federal standards that require insurers
to accept all applicants, without charging higher prices because of a
person’s illness or disability. The 2010 health law established the rate
review process, requiring insurance companies to disclose and justify
large proposed increases. Under federal rules, increases of 10 percent
or more are subject to review.
Federal
officials have often highlighted a provision of the Affordable Care Act
that caps insurers’ profits and requires them to spend at least 80
percent of premiums on medical care and related activities. “Because of
the Affordable Care Act,” Mr. Obama told supporters in 2013,
“insurance companies have to spend at least 80 percent of every dollar
that you pay in premiums on your health care — not on overhead, not on
profits, but on you.”
In
financial statements filed with the government in the last two months,
some insurers said that their claims payments totaled not just 80
percent, but more than 100 percent of premiums. And that, they said, is
unsustainable.
At
Blue Cross and Blue Shield of Minnesota, for example, the ratio of
claims paid to premium revenues was more than 115 percent, and the
company said it lost more than $135 million on its individual insurance
business in 2014. “Based on first-quarter results,” it said, “the
year-end deficit for 2015 individual business is expected to be
significantly higher.”
BlueCross
BlueShield of Tennessee, the largest insurer in the state’s individual
market, said its proposed increase of 36 percent could affect more than
209,000 consumers.
“There’s
not a lot of mystery to it,” said Roy Vaughn, a vice president of the
Tennessee Blue Cross plan. “We lost a significant amount of money in the
marketplace, $141 million, because we were not very accurate in
predicting the utilization of health care.”
Julie
Mix McPeak, the Tennessee insurance commissioner, said she would ask
“hard questions of the companies we regulate, to protect consumers.”
After
public hearings and a rigorous review, Ms. Cali, the Oregon insurance
commissioner, found that the cost of providing coverage to individuals
and families in 2014 was $830 million, while premiums were only $703
million. She directed some carriers to raise rates in 2016 even more
than they had proposed.
Health
Net, for example, requested rate increases averaging 9 percent in
Oregon. The state approved increases averaging 34.8 percent. Oregon’s
Health Co-op requested a 5.3 percent increase. The state called for a
19.9 percent increase.
“We share the concerns expressed through public comment about the affordability of health insurance
in Oregon,” said Ms. Cali, an actuary. But, she added, “inadequate
rates could result in companies going out of business in the middle of
the plan year, or being unable to pay claims.”
Coventry
Health Care, now owned by Aetna, is seeking rate increases that average
22 percent for 70,000 consumers in Missouri. “The claims experience for
these plans has been worse than anticipated,” Coventry reported.
In
its proposal to increase rates by an average of 25 percent for more
than 397,000 consumers, Blue Cross and Blue Shield of North Carolina
cited “inpatient costs, particularly in treatment of cancer and heart conditions, emergency room utilization, and cost for specialty drug medications” to treat hepatitis C, breast cancer and cystic fibrosis.
Blue
Cross and Blue Shield of Kansas sought increases averaging 37 percent
for 2016 and said the increase could affect 28,600 consumers.
“Kansans
who purchased these individual plans since 2014 were older, in general,
than expected and required more medical services than anticipated,” the
company told federal health officials.
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