Mixed pic­ture

Calif. pro­posed pre­mi­ums lower than ex­pected

Modern Healthcare - - THE WEEK IN HEALTHCARE - Jonathan Block

Af­ter weeks of hand­wring­ing about health­care re­form-in­duced “rate shock,” the ac­tual in­sur­ance pre­mi­ums pro­posed haven’t de­liv­ered it. But with­out the new re­stric­tions im­posed un­der the fed­eral law, in­sur­ance reg­u­la­tions have var­ied so much from state to state that it’s dif­fi­cult to make broad as­sump­tions based on the num­bers.

Last week, Cal­i­for­nia re­leased pro­posed plans and rates from 13 car­ri­ers for 2014. For many plans, rates will be lower.

Blue Shield of Cal­i­for­nia said rates for in­di­vid­ual and small-group pol­i­cy­hold­ers would rise an aver­age of 13% next year, much less than the 30% in­crease pro­jected two months ago in a re­port com­mis­sioned by the state’s ex­change, Cov­ered Cal­i­for­nia.

The aver­age in­di­vid­ual pre­mium sold in Cal­i­for­nia through eHealthIn­surance was $177 a month, a spokesman for the on­line in­sur­ance bro­ker said. In com­par­i­son, “sil­ver” tier plans in Cov­ered Cal­i­for­nia will cost an aver­age of $321 statewide, though those plans may have richer ben­e­fits.

Of­fi­cials for the state’s ex­change, how­ever, said it’s more mean­ing­ful to com­pare the cost of in­di­vid­ual plans on the ex­change to plans sold this year to small busi­nesses—Cal­i­for­ni­ans in the most pop­u­lous ar­eas will pay as much as 29% less for ex­change plans. In the cur­rent small-group mar­ket, as with cov­er­age un­der the Pa­tient Pro­tec­tion and Af­ford­able Care Act, in­sur­ers aren’t al­lowed to deny cov­er­age be­cause of pre­ex­ist­ing con­di­tions.

Al­though 13 car­ri­ers have sub­mit­ted plans, the ex­act num­ber of plans was not dis­closed.

The Golden State’s three largest in­sur­ers, An­them Blue Cross of Cal­i­for­nia, Blue Shield of Cal­i­for­nia and Kaiser Per­ma­nente, will com­pete for busi­ness. How­ever, sev­eral large national in­sur­ers, in­clud­ing Aetna, Cigna Corp. and Unit­edHealth Group, will not.

And Cal­i­for­nia In­sur­ance Com­mis­sioner Dave Jones ex­pressed some dis­tress about the num­ber of car­ri­ers. “There are only three

statewide health in­sur­ers sell­ing in Cov­ered Cal­i­for­nia, which means less statewide com­pe­ti­tion than we’d hoped to see in the new mar­ket­place,” he said in a pre­pared state­ment.

While Cal­i­for­nia pro­vides the first ex­am­ple of pro­posed 2014 rates in a large state, a hand­ful of smaller states have also re­leased pro­posed pre­mi­ums for next year.

Cori Uc­cello, a se­nior health fel­low at the Amer­i­can Acad­emy of Ac­tu­ar­ies, said states that al­ready im­posed the most sig­nif­i­cant in­sur­ance reg­u­la­tions called for in the ACA should see “sta­ble pre­mium changes as sub­si­dies and in­come tax cred­its bring in a lower-cost pop­u­la­tion.” Con­sumers in states where this has not been the case, she added, could see “up­ward pres­sures on pre­mi­ums.”

That pic­ture is mixed in Cal­i­for­nia. It al­ready has com­mu­nity rat­ing, which re­stricts in­sur­ers’ abil­ity to charge more based on en­rollees’ char­ac­ter­is­tics, but not guar­an­teed is­sue.

“Gen­er­ally, rates will go up for young, healthy in­di­vid­u­als who have been for­tu­nate enough to be able to pur­chase in­di­vid­ual prod­ucts … be­cause they weren’t ex­cluded on the ba­sis of a med­i­cal con­di­tion,” said Dan Men­del­son, CEO of Wash­ing­ton-based con­sult­ing firm Avalere Health. “For other peo­ple, like peo­ple with di­a­betes, heart dis­ease or mul­ti­ple scle­ro­sis, rates will come down,” he said. “The (im­por­tant) thing is not that rates are go­ing through the roof, but we are tak­ing care of each other.”

Pro­posed rates for 2014 in Ore­gon are also not as high as some pre­dicted. Af­ter fil­ing their pro­posed rates, of­fi­cials at Kaiser Foun­da­tion Health Plan of the North­west and Prov­i­dence Health Plans asked the state in­sur­ance depart­ment if they could re-file with lower ones.

That re­quest was de­nied, Ore­gon In­sur­ance Com­mis­sioner Lou Sav­age said.

“What we have said to those car­ri­ers and the rest of the car­ri­ers who have filed (is) if you want to give us ad­di­tional in­for­ma­tion about as­sump­tions, we are happy to get those,” Sav­age said. “We have not let any­one re-file their rates,” he said, be­cause “it would never end.”

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