Do you remember when the President said, “if you like your health plan, you can keep your health plan? (https://www.youtube.com/watch?v=qpa-5JdCnmo) Or this one, “The health plan will reduce care by an average of $2500 per year in premium?” (https://www.youtube.com/watch?v=_o65vMUk5so)
After two years of significant losses, insurance carriers are now asking for significant rate increases for 2017. Blue Cross/Blue Shield of Texas, which insures over 600,000 in the state, is asking for increases of between 57.3 and 59.4%. This is due to losing $416 million in 2014 and $592 million in 2015. In the State of Florida, fifteen carriers are looking for an average increase of 17.7%.
In Indiana, Anthem, the country’s second largest insurer, is asking for between 20 and 41% in its home state. In the Hawkeye state, its two top carriers, Coventry and Wellmark ,are asking for 23% and 38% respectively. Highmark ( Blue Cross/ Blue Shield) in Pennsylvania, lost $773 million on plans in the last two years. They are seeking an increase of 48%. In Delaware, Highmark’s intention is to increase premiums 32.5% while Aetna is seeking a 25% increase.
The State of Maine is requesting premium increases between 14 and 24% with the largest insurer being the Co-Op, Maine Community Health, which is asking for 22%. Maine Community currently insures 80% of the state. BlueFirst Blue Cross/ Blue Shield of Maryland, is requesting an increase on their HMO Plans of 12.4% and on their PPO plans 16%. This follows a 26% increase made last year. Cigna is asking for 30% in Maryland.
According to the New York State Department of Financial Services, insurers are requesting rate increases from as low as 6.1% to as much as 89.1%
United Health Care is withdrawing from most markets in 2017. They say they have lost close to $1 Billion on their Affordable Care Act Plans. Humana is considering the same thing. In Ohio, their Co-Op, In-Health Mutual, was recently shut down by the State and is currently liquidating. Everyone in the state on these plans will have 60 days to find a new carrier. That makes them the 14th Co-Op to shut down due to unsustainable losses.
Other than the financial losses there are several other contributing factors to these significant rate increases. One reason is the amount of enrollees are sicker than expected. Many of the new enrollees were those who had previously been denied insurance and may have been in a “risk pool”. Most states had some sort of risk pool for those who had been denied insurance, but since you can no longer deny based upon health, these risk pools have gone away. This has increased the overall cost of health insurance. Another contributing factor is for the opposite reason. Due to the increased premiums, many of the younger healthy Americans are opting to go without insurance. They are opting to pay the fine instead of the increased premiums.
Another reason for the increase is that plans were underpriced. Since insurance carriers knew how to price things based upon a healthy enrollment, they could not foresee how many people with pre-existing conditions they would be taking on in any given year.
The final and perhaps most significant reason for the increases, is the risk corridor going away in 2017. The risk corridor is basically a “bail out” to the insurance company. It was known that many of the smaller carriers would lose money in the early stages of health care reform. It was thought that the larger carriers could sustain the losses, and maybe even turn a profit. The larger carriers lost as well. In 2016, the insurance carriers on the exchange requested $2.87 billion in financial assistance. Unfortunately, the risk corridor only gave out $362 million. That is only about 13% of what was needed to cover the losses. That is a large reason why the approved not for profit Co-Ops shut down. Without the financial protection of risk corridors there is little incentive for smaller regional carriers to expand into other markets. This will decrease competition, which again can lead to higher pricing.
The annual ACA enrollment period will begin on November 1 ( unless it is changed between now and then). It could be an interesting topic come election day.