Virginia Health Insurers Propose Double-Digit Rate Hikes
June 04--Virginia health insurers are proposing rate increases in the low teens for 2016 individual coverage. That puts them in the moderate to low range nationally -- proposed hikes of 20 to 30 percent have been reported -- but it's still sticker shock for consumers after a couple of years of single-digit growth.
"It's not surprising you'd see an increase," said Doug Gray, executive director of the Virginia Association of Health Plans, an insurance advocacy group. He credited increased competition and greater risk-taking for the lower prices that prevailed last year, when underwriting practices mandated by the Affordable Care Act took effect. Insurance companies no longer can adjust premiums by gender or pre-existing health condition, but only on location, age and smoking status.
Additionally, the full data from 2014 have not yet been released, said James Juillerat, actuary for Optima Health, the insurance arm of Sentara, which has 42,000 subscribers in individual plans. "There's still a lot of uncertainty," he said.
As part of a push for transparency in health costs triggered by the ACA, insurers proposing to raise their rates by more than 10 percent are subject to a public rate review. In Virginia that takes place at the Board of Insurance on July 22.
In Virginia, 19 plans offered by 10 companies top the 10 percent increase threshold for 2016, though insurance representatives emphasized that the rates may decrease. "Some plans are going to bounce around," said Optima's Juillerat. "Our small group products are lower and the average increase is (in) the very low single digits."
Though Virginia does not place caps on premiums, there is built-in consumer protection in the ACA's medical loss ratio requirement. "Companies are required to provide detailed documentation that the rates will meet a minimum 75 percent loss ratio," said Katha Treanor, spokeswoman for the State Corporation Commission, referencing the percentage of premiums that must be spent on health care. Those filed actually range above 80 percent.
Of the Virginia plans listed, the vast majority involve proposed premium increases of between 11 and 14 percent for individuals purchasing plans outside the federal marketplace. Gray expressed caution about the impact. "It is a bit early in the process to discuss in a meaningful way. ... The CMS website focuses on those premium increases over 10 percent, many of which are applied to smaller populations of members," he said.
Anthem's proposed changes will affect the most, approximately 190,000 renewing subscribers. Asked for details, spokesman Scott Golden responded, "I don't like to get out in front of the Bureau (of Insurance) when it comes to rates. The bureau has taken the time to make the rates of all carriers available on its website, and we feel that's how the rates should be viewed at this time."
While the state's site, scc.virginia.gov, has all the filings, it does not supply percentage increases or make comparisons viable. Last year the company posted average rate increases of 8.5 percent; this year's average is 13.2 percent, "excluding the impact of aging," Golden said.
In addition to overall higher medical costs, Anthem pegged the increasing use of services as pushing premiums higher. It also cited cost-shifting from Medicare and Medicaid to private insurers and the cost of new medications for the successful treatment of Hepatitis C, a factor also cited by Humana, whose average proposed increase is 14.2 percent.
Optima credited high expenses in 2014 to pent-up demand from the newly insured and fewer healthy people signing up. "We do not assume that 2016 will necessarily be as high in claim levels as seen in 2014," it noted in its filing. However, it reported an increase in medical costs -- from higher prices and greater utilization -- at 14.5 percent over two years. Its proposed increases range from 11.8 to 14.8 percent. Additionally, it has implemented some changes in benefits that make it hard to make direct comparisons.
Aetna, with 11,000 Virginia members affected, cited increases of 5.9 percent in hospital costs and 6.5 percent in prescriptions, along with an increase of 5.8 percent in use of outpatient hospital services in raising its proposed premiums.
"For 2016, we expect that medical costs will grow by 8 to 10 percent in the individual market," said spokeswoman Anjie Coplin. "We believe the rates we are filing for 2016 will be competitive with the products offered by other carriers in the marketplace."
Salasky can be reached by phone at 757-247-4784.
SEE YOUR PLAN
To see the proposed rates for your health insurance plan for 2016, go to RateReview.HealthCare.gov; it lists all those with proposed rate increases of 10 percent or more for all states, like Virginia, that use the HealthCare.gov enrollment platform.
For all insurance filings in Virginia, go to http://www.scc.virginia.gov.
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