Blue Cross seeks to raise prices nearly 8 per­cent

Northwest Arkansas Democrat-Gazette - - FRONT PAGE - ANDY DAVIS

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.

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