As insurers request big rate hikes, AHIP touts reinsurance, tax suspension

By Shelby Livingston  | May 29, 2018

Trade association America's Health Insurance Plans is pushing for states to set up reinsurance programs and Congress to kill the industry's loathed health insurance tax as insurers file for big premium increases on several Obamacare exchanges.

Those two actions, according to the insurance industry's largest lobbying group, could help mitigate the myriad factors threatening to send individual market premiums higher in 2019.

State insurance departments in Maryland, Oregon, Vermont and Virginia have released insurers' proposed 2019 rates, which vary widely but are consistently high across most health plans.

Requested rates in Oregon, where seven insurers filed to sell plans on the individual market next year, ranged from a decrease of 9.6% compared with 2018 rates to an increase of 16.3%.

Vermont's two insurers requested increases of 7.5% and 10.9%. Plans filed in Maryland proposed increases ranging from 18.5% to a whopping 91.4% for the Blues-affiliated insurer CareFirst's PPO plan. And in Virginia, rates varied drastically from a requested decrease of 1.9% to a hike of 64.3% for 2019 coverage.

Insurers in other states will be finalizing their proposed rates over the next few months before the fifth Affordable Care Act open enrollment period begins Nov. 1.

AHIP, which counts exchange insurers Centene Corp. and Cigna Corp. as members, said in an issue brief that medical price inflation, higher prescription drug prices, the repeal of the individual insurance mandate and proposed federal regulations to expand association health plans and short-term plans are the main factors leading to higher premiums in 2019.

Factors Affecting Premiums in the 2019 Individual Exchange Marketplace	Estimated Premium Impact
Increases in medical trend—including medical price inflation and prescription drug cost increases	Increase 5.7%-6.5%
Elimination of individual mandate penalty	Increase 9%-10%
Expanded association health plans	Increase 2.7%-4.0%
Expanded short-term, limited duration plans	Increase 0.7%-1.7%
Incorporate moratorium on health insurer tax for 2019 into individual market rates	Reduce 3%

Source: AHIP

Industry experts have warned that the absence of the individual mandate penalty, which was zeroed out in December, would prompt healthy, young exchange plan members to drop their coverage, leaving the individual market with higher-cost members who are older and sicker on average, or heavily subsidized. Insurers would need to raise costs significantly to cover the sicker population.

Proposed rules to expand access to lower-cost, skimpier insurance coveragethrough association health plans and short-term limited-duration plans would likely motivate even more healthy individuals to shift out of the exchanges. Those proposed rules are expected to be finalized any day. HHS has said it expects about 100,000 to 200,000 people to switch from the ACA individual market to short-term plans.

In total, the Congressional Budget Office expects premiums for benchmark plans on the health insurance exchanges to increase by about 15% on average in 2019. Premiums increased by about 34% in 2018, by contrast.

AHIP said states could fight high premium increases with a reinsurance program, citing an Avalere analysis that found reinsurance could lower premiums by 4% to 12% depending on the design of the program and available funding. Alaska, Minnesota and Oregon have received Section 1332 waivers to establish such programs to lower premiums. Other states, including Maryland, are pursuing that route.

CareFirst CEO Chet Burrell said earlier this month that rate requests in Maryland could be reduced by as much as 20% to 30% if a reinsurance program is approved.

AHIP is also pushing for Congress to once again suspend the ACA's tax on health insurers in 2020 and beyond, which would allow insurers to reduce premiums by about 3% instead of building the tax into premium increases, according to the lobbying group. Insurers must pay the tax for 2018, though it was suspended in 2017, and Congress passed another moratorium for 2019. Insurers estimate it will cost them $14.3 billion this year. Last week, a bipartisan group of House lawmakers moved to delay the tax until 2021.

In addition to reinsurance, states are also considering implementing their own individual mandate penalties to ensure the stability of their individual insurance markets. Others are considering placing restrictions on the sale of short-term and association health plans beyond those at the federal level.

Shelby Livingston is an insurance reporter. Before joining Modern Healthcare in 2016, she covered employee benefits at Business Insurance magazine. She has a master’s degree in journalism from Northwestern University’s Medill School of Journalism and a bachelor’s in English from Clemson University.

http://www.modernhealthcare.com/article/20180529/NEWS/180529926?utm_source=modernhealthcare&utm_medium=email&utm_content=20180529-NEWS-180529926&utm_campaign=dose