Blue Cross seeks to raise prices nearly 8 percent
Arkansas’ largest health insurance company has proposed an average price increase of 7.8 percent for the plans it offers on the state’s health insurance exchange, including those that cover Medicaid recipients under the Arkansas Works program, state officials announced Wednesday.
The Arkansas Blue Cross and Blue Shield plans, including those the company offers on behalf of the national Blue Cross and Blue Shield Association, cover more than 200,000 people, including Arkansas Works enrollees and people who don’t qualify for Medicaid but buy coverage on their own rather than through an employer.
Two other companies also offer plans on the state’s insurance exchange. St. Louis-based Centene Corp. requested an average increase of 9.9 percent for its plans, which cover more than 93,000 people, the state Insurance Department announced.
Little Rock-based Qual-Choice Health Insurance requested an average increase of about 22 percent for its plans that cover about 40,000 people.
As of July 15, Medicaid recipients covered under Arkansas Works made up about 82 percent of the more than 321,000 people enrolled in exchange plans in the state, Insurance Department spokesman Ryan James said.
In a news release, Gov. Asa Hutchinson credited the Medicaid program as well as “carriers’ efforts to improve care management” for helping hold down premiums.
“In the midst of the
confusion and heated rhetoric about the future of health care insurance in our country, Arkansas has led the way in health care reform, and the result is that requested increases are much less than we are seeing nationally,” Hutchinson said.
State Insurance Commissioner Allen Kerr said in a news release, “This round of initial requests places Arkansas among the lowest in the country as many states are seeing companies ask for increases between 50 percent to 80 percent.”
The increases would take effect Jan. 1. Kerr will rule on the requested increases by Aug. 16, James said.
This year, Arkansas Blue Cross and Blue Shield raised the premiums for its plans by an average of 9.7 percent after Kerr rejected the company’s initial request for a 14.7 percent increase.
To make up the difference, the company reduced the rates that it pays hospitals and doctors for some services, company spokesman Max Greenwood said.
The company absorbed half of the impact of the reduced rate-increase request, and providers absorbed the other half through the reduced reimbursement rates, she said.
Greenwood declined to say whether the company plans any adjustments to what it pays health care providers in connection with the latest request.
She said it’s “not appropriate”
for the company to discuss details of the 2018 request while it is under review by the Insurance Department.
In a filing with the Insurance Department, the company said the benefits for its plans will be reduced because of a change in the federal “calculator” used to classify plans by attaching the names of metals to them.
The metal level reflects how much of a typical patient’s medical expenses the plan will cover: 60 percent for bronze plans, 70 percent for silver plans and 80 percent for gold plans.
The filing also indicates that Blue Cross plans to join the other insurers in charging smokers higher premiums than nonsmokers.
In the past, company representatives said they suspected smokers would lie about their tobacco use on their applications in order to pay lower premiums.
Greenwood said company officials now think some smokers will answer truthfully.
“Perhaps knowing that you’re going to be paying a higher rate if you do smoke might encourage people to stop, or at least go to their [primary-care doctor] and get assistance to do so,” she said.
The company expects to collect just over $1 billion in premiums from the individual market plans in 2018 and pay out $912.8 million in claims, according to an Insurance Department summary of company filings.
In 2016, the company paid out $702.8 million in claims associated with the plans but collected just $613.4 million in
premiums, according to the summary.
QualChoice Chief Executive Officer Michael Stock said his company’s rate request reflects an increase in customers’ use of health care services.
Almost all of those customers are enrolled through Arkansas Works, he said.
“It’s just a less healthy population than a more traditional insurance population,” he said.
The size of the rate increases will affect Arkansas’ budget because the state pays a portion of the cost of the premiums for Arkansas Works plans.
Those plans are the state’s primary way of providing coverage to nonelderly, nondisabled adults with incomes of up to 138 percent of the poverty level. This year, that’s $16,643 for an individual, or $33,948 for a family of four.
Hutchinson has requested federal approval to move about 60,000 Arkansans off the program by lowering the income cutoff to the poverty level.
Most of those affected by the change are expected to qualify for federal tax-credit subsidies to help them buy coverage in non-Medicaid plans on the exchange.
The state’s share of the cost for Arkansas Works plans is 5 percent this year and will increase to 6 percent next year.
The state Department of Human Services has estimated that restricting eligibility for the program would save the state at least $66 million over the next four years while increasing premiums for plans on the individual insurance market by as much as 1.7 percent.
The department is evaluating how the requested increases announced Wednesday would affect the program, spokesman Brandi Hinkle said.
Cynthia Cox, associate director of the health-overhaul and private-insurance study program at the Menlo Park, Calif.,-based Kaiser Family Foundation, agreed with Arkansas officials that the increase requests by Blue Cross and Centene are lower than requested increases in several other states.
“What we’re seeing in some other states is that there are more double-digit premium increases, and sometimes those double-digit premium increases are higher than 20 percent,” she said.
She said some of the larger requested increases reflect uncertainty about federal policies, such as whether the 2010 Patient Protection and Affordable Care Act’s mandate for people to have insurance will be enforced, and whether insurers will continue to receive subsidies that help pay the cost of coverage for some low-income consumers.
Ruling in a lawsuit filed by Republicans in the House of Representatives, a federal judge has ruled that the subsidies, known as cost-sharing reduction payments, were never authorized by Congress, but the judge has allowed the payments to continue while the case is on appeal.
President Donald Trump has said he might stop the payments. His administration hasn’t said whether it plans to continue pursuing the appeal.
“The most important assumption is that we are assuming that the CSR [cost-sharing reduction] will be paid, otherwise our rates are not adequate and we will need to revise our filing,” Arkansas Blue Cross and Blue Shield said in its rate filing, emphasizing the statement in bold lettering.
The company did appear to factor in an increase in medical costs “due to the removal of the individual mandate,” although the size of the increase was redacted from the public version of the filing.
To enforce the mandate, the Affordable Care Act calls for most people who go without coverage to pay a penalty of 2.5 percent of their income above the tax filing threshold. Last year, the threshold was $10,350 for an individual or $20,700 for a married couple filing a joint tax return.
In response to a Jan. 20 executive order by Trump, the Internal Revenue Service said it would not reject federal tax returns that do not contain information about whether the taxpayer had health coverage in 2016. The agency said, however, that it will continue to enforce the mandate and that taxpayers who omit information “may receive follow-up questions and correspondence at a future date.”
With most or all of QualChoice’s individual-market premiums covered by Medicaid under Arkansas Works, Stock said, most of the customers in those plans don’t need the additional incentive to sign up.
“The impact of the penalty on them is really kind of moot,” Stock said.