Health insurers cope with ACA losses

About 5 percent of people with health insurance in Pennsylvania have bought individual and smallgroup plans, many sold under the Affordable Care Act, according to the Pennsylvania Insurance Department.

But while they are a small slice of people with insurance, they are costing insurance companies millions of dollars.

Insurers say they have paid out more than they've made on plans sold through the exchange since it opened in 2014, largely due to underestimating their costs. Individuals who signed up for health plans through the ACA were either previously uninsured or underinsured, and they have used their health insurance plans at higher rates than expected.

While some insurers are leaving the ACA market altogether, others are asking to increase premiums.

Insurers across the country are asking for higher rates, with the average requested increase coming in at 22.5 percent, according to Arthur Lucker, an actuary at Philadelphia-based INS Consultants.

Exiting the exchanges

Insurers leaving the exchange include Minnesota-based United-Health. Aetna, meanwhile, is reevaluating its ACA coverage, the company said earlier this month.

Others have sued the government in an effort to recover their losses.

The government created a program designed to offer a financial cushion to insurers that were offering health plans through the ACA. The program's goal was to provide insurers with back-up funding as they adjusted to the ACA market, since people insured under the ACA might have higher medical expenses.

So far, the government has made about 12.4 percent of its expected payments, according to Lucker. The program, known as the risk corridor program, is set to expire in 2016.

An Oregon-based health insurer, Health Republic Insurance, filed a lawsuit against the government in February to collect its risk corridor payments. In May, Highmark Inc. filed a similar lawsuit. Highmark says it lost $223 million in 2014 and has predicted a loss of $500 million in 2015 on health plans offered under the ACA, according to the lawsuit.

Highmark is joined in its ACA losses by other midstate insurers such as Harrisburg-based Capital BlueCross.

Where midstate insurers weigh in

Highmark and Capital BlueCross both requested to raise premiums for 2017 to help cover the high expenses they're experiencing from offering individual and small-group health plans through the ACA.

Alarmed by how much insurers across the state want to hike rates, the Pennsylvania Insurance Department held a public hearing last month allowing insurers to defend their requests.

On average, insurers in the state have asked to increase individual health plan premiums by 23.6 percent and group plan premiums by 7.9 percent, according to the department.

Insurers say that charging people more for individual health plans will make the market more sustainable, but consumers are worried that they won't be able to afford health coverage next year if insurers get their way. Some spoke at the hearing on July 27 in Harrisburg.

Insurance commissioner Teresa Miller assured those who spoke that the department is considering their comments as it reviews the rate requests.

Miller reminded everyone at the hearing that many individuals buying health insurance through the marketplace will get government subsidies to help offset their costs.

"It is important to remember that there are many options out there, and roughly 75 percent of Pennsylvanians shopping on Healthcare.gov will receive subsidies to help off-set their costs," Miller said. "The Insurance Department is committed to sustaining our health insurance market so consumers will continue to have options for quality and affordable care."

The department must reach a decision to approve or deny raising insurance rates for 2017 before open enrollment begins this November.

The department wants insurers to show that their requested premiums will cover their expected costs for the upcoming year, and that they're not trying to make up losses from previous years, the department explained.

The expected costs include medical and operating expenses, but the department also factors in each insurer's need to make a profit and its financial condition.

Highmark is asking for an increase of 48 percent for individual health plans and 1.85 percent for small-group plans.

Capital BlueCross is asking for a 20 percent hike on individual health plans and about 8 percent for small-group plans. Capital files its requests under Capital Advantage Assurance Co., Capital Advantage Insurance Co., Keystone Health Plan Central.

The department only reviews rate requests for individual and small-group health plans, both of which are available through the ACA exchange.

It does not regulate large group health plans that are available to people through their employers, or government programs such as Medicaid and Medicare, which makes up the majority of insured people in Pennsylvania.