Biggest insurer in Texas seeking 57 percent rise

WASHINGTON — The largest health insurer in Texas wants to raise its rates on individual policies by an average of nearly 60 percent, a new sign that President Barack Obama’s overhaul hasn’t solved the problem of price spikes.

Texas isn’t alone. Citing financial losses under the health care law, many insurers around the country are requesting bigger premium increases for 2017. That’s to account for lower-than-hoped enrollment, sicker-than-expected customers and problems with the government’s financial backstop for insurance markets.

The national picture will take weeks to fill in. With data available for about half the states, premium increases appear to be sharper, but there are also huge differences between states and among insurers. Health insurance is priced locally.

Earlier this week, North Carolina’s largest insurer said it will seek an average increase of 18.8 percent.

A recent analysis of nine states by the consulting firm Avalere Health found that average premium increases for the most popular kind of plan ranged from 5 percent in Washington state to 44 percent in Vermont.

Arkansas Blue Cross and Blue Shield, the state’s largest health insurer, has proposed an average 14.7 percent increase for its plans, which cover more than 200,000 people. Medicaid pays the premiums for about two-thirds of those covered by Blue Cross under the state’s so-called private option Medicaid expansion.

Two other insurers — Arkansasbased QualChoice Health Insurance and St. Louis-based Centene Corp. — asked for average increases of more than 23 percent and less than 10 percent, respectively.

Arkansas Gov. Asa Hutchinson and Insurance Commissioner Allen Kerr said they don’t believe “there is substantive justification” for the requested increases. The Insurance Department often grants premium increases that are less than what insurers requested.

Nationwide, millions of customers will be shielded from price hikes by government subsidies, which typically cover over 70 percent of the premiums. People who don’t have access to a workplace plan can buy a policy directly on the health law’s marketplaces.

But many consumers aren’t eligible for the income-based subsidies and get no such protection. That demographic includes small business owners, self-employed people and early retirees. Under the law, most Americans are required to have health insurance or risk being fined.

Blue Cross Blue Shield of Texas has about 603,000 individual policyholders and, unlike other insurers in the state, offers coverage in every county. In a recent filing with federal regulators, a summary of which is available on healthcare.gov, the company said it is seeking increases averaging from 57.3 percent to 59.4 percent across its individual market plans.

In a statement, Blue Cross Blue Shield of Texas said its request is based on strong financial principles, science and data. “It’s also important to understand the magnitude of the losses … experienced in the individual retail market over the past two years,” the statement said. The company says it lost $592 million last year and $416 million in 2014.

Texas is the health care law’s third- largest market, after Florida and California. Texas state regulators said the insurer’s request is confidential and they can’t comment on it. However, Insurance Department spokesman Ben Gonzalez said the state can withdraw approval if the request doesn’t meet requirements and standards in Texas law.

Wichita Falls insurance broker Kelly Fristoe said the burden of premium increases will fall hardest on rural communities where Blue Cross Blue Shield in many cases is the only option. Metropolitan areas like Houston, Dallas and Austin attract more insurers.

“This is going to be a very big disrupter of the market,” Fristoe said. Some relatively healthy people “would probably be willing to roll the dice and take their chances” by dropping coverage, even if it means they might be fined.

The insurer cautioned that the average premiums filed with regulators don’t represent the true bottom line for individual consumers. Some people may find even with a higher premium, the coverage remains a good value.

The Obama administration said concerns about 2017 premiums are premature and overblown.

In a statement, the Health and Human Services Department said the Texas rate request is just the beginning of a process. Consumers in Texas and other states will have lower-premium options when sign-up season begins Nov. 1. If they don’t like what their current insurer is charging for 2017, the statement said, they can switch.