In a sign of the tumult in the health
insurance industry under the Affordable Care Act, companies are seeking
wildly differing rate increases in premiums for 2016, with some as high as 85
percent, according to information released on Monday by the federal government
for the 37 states using HealthCare.gov as their exchange.
The data from the Centers for Medicare
and Medicaid
Services included only proposed rate increases of 10 percent or more, and
federal officials emphasized that it would be months before final rates were
set. Regulators in some states have the authority to overrule rate increases
they deem to be too high.
Experts cautioned against relying
too heavily on the data as a predictor of prices for next year.
“Trying to gauge the average
premium hike from just the biggest increases is like measuring the average
height of the public by looking at N.B.A. players,” said Larry Levitt, an
executive with the Kaiser Family Foundation.
But many insurers, including those
seeking relatively hefty increases below 10 percent, say they are asking for
higher premiums because they remain unsure about the future and what their
medical costs will be.
“The insurers are in the business
of taking risk, but the one thing they hate is uncertainty,” Mr. Levitt
said.
Many unknowns remain. Among them
are the questions of how many more people will sign up for coverage and what the
state of their health will be. Healthier customers can generally lower costs for
the overall group. Other uncertainties include the effect of the law’s
protections against large losses for insurers, and a Supreme Court decision that
will determine whether subsidies will be available in the states participating
in the federal exchange.
Some of the requests for premium
increases show how insurers are struggling to find the right balance between
keeping their prices low enough to attract customers but high enough to cover
costs — and make a profit.
In Delaware, the state’s insurance
regulator said on Monday that two insurers asked for much higher rates in 2016:
Highmark Blue Cross Blue Shield sought a 25 percent increase, while Aetna wanted
an increase of 16 percent.
“Large rate increase requests like
these are occurring in several states across the country,” said Karen Weldin
Stewart, the Delaware insurance commissioner, who said she planned to try to
reduce those rate requests.
In Georgia, Alliant Health Plans
is seeking increases as high as 85 percent for some plans, with an average
increase of 38 percent, according to the filing listed on the federal website,
ratereview.healthcare.gov. The
insurer declined to comment on the filing.
But there are wide variations in
some states. In Maryland, for example, while CareFirst BlueCross BlueShield is
seeking a 30-percent increase for some of its plans, others including Cigna,
Kaiser Permanente and UnitedHealthcare are proposing to lower premiums for some
plans.
Federal officials point out that
consumers will have a choice of plans, just as they did last year. Many people
kept their costs low by switching plans; 29 percent of those who re-enrolled
picked a different policy from the previous year.
Some insurers like Anthem, one of
the largest for-profit companies, say they do not expect significant increases
in most markets. Most of the for-profit insurance companies have reported strong
financial results, benefiting in part from the subsidies that have generated
millions more paying customers.
But others say they need to adjust
rates because they miscalculated their medical costs and the strength of the
competition.
“Some may have been overly
optimistic and some may have been pessimistic,” said Sabrina Corlette, a health
insurance researcher at Georgetown University. “It’s so difficult because
there are so many different factors at play.”
In Tennessee, BlueCross BlueShield
said it lost $141 million on individual policies sold on the exchange because it
was paying $1.14 in medical care for every dollar in premiums. The company has
requested an average rate increase of 36 percent.
Many people signing up were much
sicker than the insurer expected, said Roy Vaughn, a spokesman for the Tennessee
plan. “We’re trying to get it as right as we can,” he said.
In some cases, the miscalculations
are causing insurers to rethink their strategy. Faced with significant losses
from selling policies on the exchange, Assurant Health, a for-profit insurer
that had been an aggressive participant last year, said it was looking for
someone to take over its business or it would leave the market in 2016.
In Connecticut, HealthyCT, one of
the consumer-oriented co-op plans created under the federal law, is requesting
an average rate increase of 14 percent, after decreasing premiums for 2015.
Whether state regulators will
agree to the increase request remains an open question, said Ken Lalime, the
co-op’s chief executive. “I don’t know if that’s the final number we’ll end up
with.”
Like many insurers, HealthyCT said
it was less protected from losses as provisions of the law that were meant to
encourage companies to enter the market were phased out. Insurers are also
uncertain whether they are enrolling people who are sicker than customers of
their competitors and whether they will be reimbursed for their higher risk.
“It’s the year of actuarial
uncertainty, and actuaries are conservative,” said Dr. Martin Hickey, chairman
of the National Alliance of State Health CO-OPs and the chief executive of the
New Mexico exchange. “The safest thing to do is to raise rates.”
And while the companies say they
have not generally seen a rapid rise in medical costs that would cause them to
raise rates sharply for 2016, Mr. Lalime and other executives are quick to point
to the high cost of new drugs like those used to treat hepatitis
C.
Ms. Corlette and others say they
believe insurers will continue to try to offer low prices, especially for
midlevel plans. While insurers may not be overly optimistic that there will be a
large number of additional customers signing up next year, the fact that people
have switched plans may mean they can still capture market share. “It may change
the incentives,” Ms. Corlette said.
As insurers gain more experience
in the market, the expectation is that they will be confronted with fewer
surprises. And while the Supreme Court decision is not expected to affect next
year’s pricing, insurers are uncertain about that as well.
Many plans have decided to take a
sit-back-and-wait posture about the case, said Richard M. Judy, a principal in
PwC’s health consulting business.
“Health plans have put so much
time and effort getting ready for these exchanges,” he said. “It would be a
crushing blow to see that all unraveled.”