Highmark, UPMC propose higher Obamacare rates

May 25--Highmark Inc. wants to raise health insurance premiums by an average of up to 48 percent next year for plans the insurer sells to individuals and families on the Affordable Care Act's marketplace.

The Pennsylvania Insurance Department on Wednesday posted increases Highmark and other insurers requested for their ACA plans for 2017. The department will decide by October whether to adjust the rates, officials said.

The increases requested by Highmark, the state's largest insurer, averaged among the highest. Plans sold under the name Highmark Health Insurance Company, which cover about 20,000 people, would increase an average of 48 percent. Plans sold under the name Highmark Inc., which cover 39,000 people, would increase by an average 38 percent.

The premium prices, even when finalized, don't translate directly to increases consumers might pay, since most people who buy ACA plans receive federal subsidies based on their income and the costs of regional benchmark plans. The subsidies, which come in the form of tax credits, increase as prices of the benchmark plans increase.

"Our requested rate increases reflect what we believe we need to make this market sustainable," Alexis Miller, Highmark's senior vice president of individual and small group markets, said in an interview.

The insurer lost $773 million on the plans in 2014 and 2015 after sicker-than-expected members' medical bills exceeded the premiums Highmark collected. The insurer set premiums for 2014 and 2015 that were among the lowest in the nation, attracting more signups than other insurers.

Few states have yet released 2017 proposed rates, but bigger increases are expected for next year than for this year, said Cynthia Cox, who focuses on health reform and private insurance as an associate director at Kaiser Family Foundation, a Washington, D.C.-based health research nonprofit.

Some of the biggest increases are expected in states that set low premiums in the market's earliest years, such as Pennsylvania, Cox said.

Despite price swings around the country, Cox said experts anticipate the market to eventually stabilize.

"It was expected that there would be some volatility in this marketplace because it was a completely new market," she said.

Highmark's requested increases are partly driven by the expiration in 2017 of two federal programs that protect insurance companies, known as risk corridors and reinsurance, Miller said. Highmark recently sued the federal government over roughly $223 million in risk corridor payments for 2014 that Highmark claims the federal government owes the insurer.

UPMC Health Plan, whose ACA market share jumped in 2016, requested increases averaging 16 percent for 2017.

Highmark now has about 125,000 ACA members in Pennsylvania, while UPMC Health plan has about 122,000, according to spokesmen for the insurers.

Aetna, which will sell ACA plans in Pennsylvania next year but not in Allegheny County, requested increases averaging 17 percent. Geisinger Health Plan, which sells plans in the central and northeast parts of the state, requested increases averaging 41 percent. UnitedHealthcare will no longer sell ACA plans in Pennsylvania and most other states, the insurer announced earlier this year.

Increases will vary for particular sets of plans, which on the marketplace are categorized as bronze, silver, gold and platinum depending on the level of benefits. Insurers have not yet released proposed rates or designs for specific plans. The lowest-priced "silver" plan -- the most popular level -- sold in the southwestern part of Pennsylvania in 2016 cost $187 per month for a 40-year-old nonsmoker. The plan was sold by UPMC Health Plan.

"While proposed rate increases this year are a concern, there are several factors that are driving these rate proposals that may not be there in future years," Pennsylvania Insurance Commissioner Teresa Miller said in a statement. "In addition, some insurers in the ACA's first few years priced their plans to attract new customers, and now are correcting these rates to better reflect the anticipated costs of covering the people who bought coverage. It's important to note that these factors may have less impact on rates in future years."

Last year, the Pennsylvania Insurance Department capped Highmark's increases at an average of 20 percent after the insurer proposed increases of up to 37 percent.

"Last year, 12 of the 19 companies selling individual plans in Pennsylvania saw final rate increases of less than 10 percent, and six companies that proposed increases of more than 25 percent had those rates lowered by the Insurance Department," said Antoinette Kraus, executive director of Pennsylvania Health Access Network, a consumer-focused group. "We encourage Commissioner Miller to use these tools again to actively balance the needs of insurers' financial health and solvency with consumers' needs for quality plans."

Consumers can also save money by shopping around for cheaper plans once open enrollment for the 2017 plans starts Nov. 1, Kraus said.

About 509,000 Pennsylvanians have individual health plans through the ACA, according to the Pennsylvania Insurance Department. Another 375,000 are covered under plans sold in the small group market, according to the department. The department also released 2017 proposed rates for the small group market on Wednesday, showing smaller increases.

Wes Venteicher is a Tribune-Review staff writer. Reach him at 412-380-5676 or [email protected].

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