Uncertainty in Washington driving up health insurance rates, insurers say

Meredith CohnContact ReporterThe Baltimore Sun

Two Maryland health insurance companies defended hefty rate increases they were seeking for insurance plans offered on the state’s exchange under Obamacare in part by citing the uncertainty in Washington over the law’s future.

Representatives of both Evergreen Health and Kaiser Health Plan of the Mid-Atlantic testified Monday before the Maryland Insurance Administration, which must decide whether to accept or adjust the requested rate increases before the next enrollment period begins this fall. The administration already held a hearing on a large increase being sought by CareFirst BlueCross BlueShield, the state’s dominant insurer.

“The uncertainty continues as Congress contemplates changes,” said Elliott Hooper, senior general counsel for Evergreen, which plans to return to the market after a year off to convert to a for-profit insurer. “The rules for the market need to be known.”

A Republican-drafted House bill passed in May but a vote on a Senate bill was postponed for lack of support. Four Republican senators also recently announced their opposition to the current bill.

As Congress debates overhauling the law, consumers and their advocates want to know why insurers are seeking such large increases.

“To whom it may concern,” wrote a healthy 28-year-old Baltimore man to Maryland insurance regulators about his premiums that could rise more than 30 percent, “is this a joke?”

Insurers say they have lost millions of dollars on Affordable Care Act plans because consumers have been sicker than expected and a program designed to offset costs was eliminated.

Insurance company officials said they rely on assumptions about costs, from administration to patient claims to the number of enrollees in specific plans.

Yet, they said they don’t even know if the government will continue to require Americans to sign up, and high costs may mean fewer people do so. The so-called “individual mandate” has been a Republican target, and a bane to some consumers, since it was first included in the 2010 health law as a means of balancing sick people in the insurance pool with healthier ones.

“Our filing assumes at a minimum the public perception of the mandate is that it will not be enforced.” said Jill Van Den Bos, a consulting actuary for Evergreen.

Evergreen attributed 19 percent of its rate increase request to a weakened mandate. The insurer revised its request recently to a 65 percent average increase, up from 27.8 percent.

Kaiser Health Plan of the Mid-Atlantic, which covers about a third of the market, also revised its request and is seeking an average 25.1 percent increase, up from 18.08 percent.

There are three insurers planning to sell policies in 2018 to Marylanders who don’t get coverage through an employer. Cigna Health and Life Insurance Co. said last month it would leave the market, following UnitedHealthcare, which stopped selling plans last year.

Cigna, with about 1 percent of the market, told the insurance administration that it was “poorly positioned competitively and exposed to significant uncertainty.”

Kaiser and Evergreen officials said they revised their requests in part because of the large request by CareFirst, which asked for a 52 percent average increase.

The other insurers said CareFirst’s assumptions affect their own because they all partake in a so-call risk adjustment program in which insurers with healthier enrollees pay those with sicker ones and therefore higher costs of care.

Kaiser’s Sheila Schroer said that in the first year Kaiser did not know if it would pay or get paid, so it assumed no costs. It turned out that the company needed to make a multimillion-dollar payment to compensate other insurers. If CareFirst succeeds in raising its rates so much, more and sicklier people could switch to Kaiser policies, said Schroer, the insurer’s executive director and chief actuary for the Mid-Atlantic states.

“We didn’t get into the ACA intending to lose many millions,” she said. “We’re committed to the market but we can’t continue to do so at a financial loss.”

Beth Sammis of the advocacy group Consumer Health First asked the state to reject the large requests “based on conjecture.”

“Higher rates will do more to drive people from the market than all the chatter at the federal level,” she said.

meredith.cohn@baltsun.com

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