First clues por­tend steep hikes, wide vari­a­tion in 2019 in­di­vid­ual rates

Modern Healthcare - - News - By Shelby Liv­ingston

Af­ter a year of siz­able rate hikes, in­dus­try ob­servers are watch­ing care­fully how in­sur­ers re­act to a spate of pol­icy changes aimed at re­shap­ing the in­di­vid­ual mar­ket.

Rates filed in Mary­land and Vir­ginia—the first two states to an­nounce in­sur­ers’ plans for 2019— of­fer a glimpse at just how high pre­mi­ums could rise.

Al­though the re­quests could change be­fore open en­roll­ment in Novem­ber, two trends are emerg­ing: rate hikes will be big, but likely not as steep as the sticker-shock rate re­quests of 2018. And again, there will be wide swings across states and plans.

The rates are the first an­nounced since the Trump ad­min­is­tra­tion moved to zero-out the in­di­vid­ual man­date penalty and pro­posed ex­pand­ing ac­cess to cheaper, skimpy in­surance poli­cies.

“There’s go­ing to be more vari­a­tion than ever be­cause states are start­ing to have more choices in how they re­spond to federal flex­i­bil­ity,” said Joel Ario, man­ag­ing di­rec­tor of Manatt Health and for­mer Penn­syl­va­nia in­surance com­mis­sioner. Some states, in­clud­ing Mary­land, are mov­ing to set up rein­sur­ance pro­grams to help bring down high pre­mi­ums, for in­stance.

In Vir­ginia, the eight health plans slated to of­fer in­di­vid­ual cov­er­age re­quested a wide range of 2019 rate in­creases for on- and off-ex­change plans, but most re­quests were lower than the ap­proved rates last year.

The re­quested rates range from a de­crease of 1.9% by Op­tima Health Plan to a

64.3% in­crease by CareFirst sub­sidiary Group Hospi­tal­iza­tion and Med­i­cal Ser­vices. For 2018 cov­er­age, Vir­ginia reg­u­la­tors ap­proved an 81.8% rate hike for Op­tima and 67.4% for CareFirst.

Mean­while, Mary­land’s two in­sur­ers asked reg­u­la­tors for an av­er­age rate in­crease of 30.2% for in­di­vid­ual cov­er­age, a monthly premium of $592. That com­pares with an av­er­age ap­proved rate re­quest of 43.9% for 2018 cov­er­age. In that state, Kaiser Foun­da­tion Health Plan filed to raise rates by 37.4%, while CareFirst’s Group Hospi­tal­iza­tion sub­sidiary re­quested a rate in­crease of 91.4% for its smaller group of PPO mem­bers. CareFirst BlueChoice, which in­sures 58% of Mary­land’s mar­ket, re­quested a hike of 18.5% for HMO mem­bers.

By com­par­i­son, Kaiser’s rates rose 36.3% in 2018. CareFirst’s Hospi­tal­iza­tion plan in­creased rates by 53.6% and its Blue Choice plan by 45.3%.

Ex­actly how much of an im­pact the ze­roed-out in­di­vid­ual man­date penalty—ef­fec­tive in 2019—and pro­posed rules to ex­pand ac­cess to short-term health plans and as­so­ci­a­tion health plans have on rate in­creases largely de­pends on whether in­surance ac­tu­ar­ies be­lieve those fac­tors will dis­rupt an in­surer’s group of mem­bers.

Cigna CEO David Cor­dani, for in­stance, said the man­date penalty won’t be a huge driver of rate in­creases be­cause it has “proven to be more porous in re­al­ity” than how it was ini­tially imag­ined. Cigna re­quested a 15% rate in­crease in Vir­ginia.

CareFirst CEO Chet Burrell also said that the pool of peo­ple en­rolling is be­com­ing sicker. “The rates, as high as they’ve been and as steeply as they have in­creased, have not kept up with how costly it is to take care of peo­ple who are as sick as the pop­u­la­tion in­volved,” Burrell said. The re­peal of the in­di­vid­ual man­date penalty will only worsen that trend, he said. About 5% of CareFirst’s re­quested rate hikes were at­trib­uted to lack of the in­di­vid­ual man­date penalty, ac­cord­ing to the state.

The Trump ad­min­is­tra­tion’s de­ci­sion to end cost-shar­ing re­duc­tion pay­ments, which lower co­pay­ments and de­ductibles for peo­ple with in­comes be­low 250% of the poverty level, drove price in­creases for 2018, tack­ing on an ex­tra 20% to rates. But the ab­sence of CSR fund­ing is un­likely to af­fect rates this year be­cause in­sur­ers al­ready ac­counted for that, ac­tu­ar­ies said.

The smaller rate in­creases also in­di­cate that the mar­ket may be sta­bi­liz­ing, said Nick Ort­ner, a con­sult­ing ac­tu­ary with Mil­li­man. Even so, rates are high, par­tic­u­larly for un­sub­si­dized con­sumers who will feel the full brunt of the hikes. Mary­land In­surance Com­mis­sioner Al Red­mer said the pro­posed rates could come down if the federal gov­ern­ment ap­proves the state’s soon-to-be-sub­mit­ted ap­pli­ca­tion for a 1332 waiver and rein­sur­ance pro­gram to sub­si­dize claims of high­cost pa­tients.

Burrell pro­jected that rates would be re­duced by as much as 20% to 30% if a rein­sur­ance pro­gram is ap­proved.

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