ACA rates to rise, but by how much?

3 insurers serving Houston expected to return to health exchange in 2018

The three insurers that offered plans on the Affordable Care Act’s exchange in Houston last year appear to be returning in 2018, but only one was willing to reveal how much it could cost customers.

Community Health Choice, a Houston-area insurer, told the Chronicle on Wednesday it asked the federal government to approve a 16 percent average bump for eight plans. But the insurer added it might still need to ask for much more due to the current political upheaval surrounding health care reform.

As the deadline for filing rate increase requests came and went Thursday, the other two insurers were less forthcoming.

Molina Healthcare, a California-based Fortune 500 insurer that has had a significant presence in the ACA exchanges, confirmed late Wednesday that it would remain in Texas but declined to elaborate on where it was offering plans or the rate increase.

“We don’t share details around the rate submission as they are still in the review process,” the company said in a statement on Thursday, adding the company would release the information after the Centers for Medicare and Medicaid Services, or CMS, approved the request, which might not be for months.

Blue Cross and Blue Shield of Texas, the state’s

largest insurer, also declined to offer any specificity about its plans for next year, citing the same reason of them being under review.

“We’re working through the regulatory filing process and our rates have not been finalized,” the company said in a statement. “We hope to again participate in the individual market, but haven’t made any final decisions concerning our level of participation.”

Texas is one of only a handful of states that does not do its own rate review, but depends on the federal government to make the final determination if an increase is reasonable.

CMS posts rate increase requests on its website, but when the information will be available is unclear.

Last year Blue Cross and Blue Shield initially asked for increases of nearly 60 percent on three of its exchange plans in Texas, but those rates were later adjusted to a range of 44 to 48 percent. Community Health upped its initial request from a 6.9 percent increase to 21.03 percent.

Turmoil in Washington

Ken Janda, CEO of Community Health, said the requests are probably more subject to change.

The ongoing turmoil in Washington, he said, has made it extraordinarily difficult for companies like his to calculate risk and set rates because insurers do not know how many will sign up or more importantly, how sick they will be.

Republicans have vowed to dismantle the existing Affordable Care Act, also known as Obamacare.

“We promised multiple times, at least in the last three elections, to do away with this disaster of a health care law so that American families can get the health care they need at a price they can afford,” U.S. Sen. John Cornyn, R-Texas, said recently.

The three insurers were the only ones in Houston to offer plans on this year’s exchange, down from seven in 2016. Aetna, Humana and Cigna previously pulled out of the exchange in Houston.

Obamacare critics have seized on rate hikes and insurer defections, calling them further proof that the law is a failure. Already Blue Cross and Blue Shield of Kansas City has announced it will not offer plans, leaving more than two dozen counties in the region without an insurer.

Janda, and other insurers, have countered that the blame lies instead with those working to erase the progress made under the law and disrupt an insurance market finally starting to stabilize .“The vastmajority of this has been caused by the current administration and by Congress, not by the ACA,” he said.

Half of his company’s proposed rate increase, is within the traditional range to keep pace with rapidly escalating health care costs, especially among prescription drugs, he said. The second half was solely a hedge against the political unknowns, he said.

Under the GOP plan known as the American Health Care Act people will no longer be required to carry health insurance and insurers will again be able to offer less comprehensive plans that are cheaper for some. Even before the bill passes, the White House has already said people who do not carry insurance will no longer be penalized.

But the trade-off will be that risk pools will shrink and it will cost dramatically more to cover those who have expensive medical needs and use insurance most, Janda said.

The AHCA passed the House and is in the Senate’s hands, where it is expected to be revised.

Cornyn said Wednesday in a radio interview that he expects the AHCA will be ready for President Donald Trump to sign into law by the end of July. Others are less sure as the measure remains unpopular within the medical community, the insurance industry and a skeptical public who fear they will lose coverage.

Last week, the Congressional Budget Office estimated that under the House plan as many as 14 million more Americans could become uninsured by next year than under the current law, rising to 51 million in a decade. The number is especially troubling in Texas, which leads the U.S. in uninsured.

The new CBO report also estimated that under the AHCA the federal deficit would be cut $119 billion over a decade, significantly less than the $150 billion in savings estimated prior to adjustments to the bill.

Janda said another wild card in trying to calculate rates is uncertainty over whether the Trump administration will allow the continued payments to insurers to assist low-income customers with their deductibles and co-pays. The payments are part of a legal battle brought by opponents of Obamacare.

Should those end, his company could further raise premiums as much as 20 percent more on top of the 16 percent to make up for the shortfall, Janda said.

Profits and losses

Dr. Mario Molina, the previous CEO of Molina Healthcare, said in March that his company lost $100 million in plans in 2016, dashing a hope that the insurer would become profitable on exchange plans.

Last month, Molina was forced out of the company his father founded, a move that stemmed from board dissatisfaction with the company’s performance, according to a story in the Wall Street Journal.

Health Care Service Corp., the parent company of Blue Cross and Blue Shield of Texas, stabilized in 2016, turning profitable after two years of losses. The insurer, based in Chicago, posted $106 million in net profit after losing $65 million in 2015 and $281 million in 2014, according to financial records.

The company reported it lost $500 million in its exchange offerings in its five states but the bleeding had lessened from a reported $1.5 billion in 2015. The insurer has about 15 million members and pulled in $34 billion in revenue in 2016.

While the rate increases reported apply only to the individual market — a small slice of the nation’s overall insurance industry — the turmoil could reach those who get their insurance through group and employer-sponsored plans, said Michael Williams, a Houston-based partner at Mercer, a global human resources consulting firm.

As people become uninsured the cost of their care is passed on to hospitals and providers who treat them without compensation. Then the insured indirectly begin to pay for the uninsured through higher property taxes to fund public hospitals, potentially higher medical costs and a bump in their own premiums.

“Somebody is going to pick up that cost,” Williams said.