How much will health insurance increase for WNY small businesses and individuals? Here's what insurers requested [The Buffalo News, N.Y.]

Jun. 1—Health insurers across the Buffalo Niagara region are asking the state for double-digit increases in 2024 premiums for small group and individual health insurance plans.

The three dominant health plans in Western New York all requested substantial rate bumps because of rising medical and drug costs as well as inflation.

— Highmark Western and Northeastern New York, which includes Highmark Blue Cross Blue Shield of Western New York, is requesting an average increase of 22.6% for individuals, a market in which it has 6,612 members. For small group plans, in which Highmark has 47,121 members, the insurer is looking for an average increase of 22%.

— Meanwhile, Independent Health is requesting an average rate increase of 39.2% increase in the individual market, where it has 10,603 members. On the small groups, in which Independent Health lists 46,865 members, the insurer requested an increase of 16.8%.

— Excellus Health Plan, which includes Univera Healthcare, is seeking an average increase of 15.2% in the individual market, in which the health plan has 25,677 members enrolled. For small group plans, in which Excellus lists 145,429 members, the health plan requested an average increase of 12.6%.

Other insurers with a presence in Western New York also requested increases.

That includes Fidelis, which is requesting an 18.2% increase in the individual market; MVP Health Plan, which is requesting an individual market bump of 13.3% and a small group increase of 11%; and United Healthcare, which wants a 20.9% increase for individuals and a 12.5% bump for small groups.

The average increase requested by health plans in the state was about 21% in the individual market and just over 15% for small groups.

These rate adjustments submitted to the state affect people who buy individual commercial health insurance and small employers with 100 or fewer full-time workers, together comprising a small slice of members for most insurers. The rate increases, which do not affect large employers with more than 100 workers, highlight the upward pressure on premiums.

From here, the state will evaluate the requests, gather public feedback and, most likely, adjust the increases downward.

Rates are typically finalized by mid-August.

Why the increase?

In statements and summaries filed with the state, the three major local health plans point to rising drug and hospital costs, regulatory factors and near-record inflation as the reasons behind the rate requests.

"Coming in the wake of the Covid pandemic, and its devastating economic impact on hospitals, the proposed rates for individual and small group — which impact approximately 10% of our membership — are significant," Highmark said in a statement. "They were requested to cover the anticipated costs of members' health care, driven by increased pharmaceutical and hospital costs, as well as regulatory mandates, taxes, and fees."

While Highmark said it recognizes the rising medical costs are a burden on small businesses and individuals, the health plan said that it has lost $250 million in those sectors over the last five years. That demonstrates "the critical need for sufficient premium rates," Highmark said.

Rich Argentieri, chief sales and marketing officer at Independent Health, said in a statement that the health plan's proposed rate adjustments reflects the ongoing economic environment and inflation that has gripped the company, the health care system and the entire region over the last two years.

"Increased medical costs, increased utilization of higher-cost specialty drugs, and inflationary factors affecting hospitals are among the reasons for these proposed rate changes," said Argentieri, who also noted that Independent Health is expecting to receive "significantly less" risk-adjustment funding from the state.

Further, he said these proposed increases come after four years of comparatively low rate adjustments by Independent Health. Between 2020 and 2023, the health plan said its rate adjustments averaged 3.5% for small groups and about 1.4% for individuals.

Two of the three major area health plans reported a financial deficit last year.

Independent Health logged a deficit of $34.5 million on revenue of more than $2.1 billion in 2022. Revenue, however, was up by more than $170 million from 2021 due to an increase of nearly 25,000 new members. But medical expenses last year also were up by $164 million from 2021.

Highmark Western and Northeastern New York reported a loss of $61 million on revenue of $3.1 billion last year, which was the health plan's second consecutive year with a loss. Notably, the 2022 results included a $74.5 million loss in its small group plans.

The Rochester-based Excellus, meanwhile, reported profits last year of about $59 million — a 50% decline from 2021 — on revenue of $6.6 billion.

Univera President Art Wingerter pointed out that rising drug prices are having the fastest-growing impact on medical spending trends. For example, prescription drug spending represents about 22% of the health plan's claims expense in the combined small group and individual market, he said.

While the acceptance of generic drugs has helped boost savings, that is being outpaced by the rising cost and utilization of specialty medications, such as biologics and gene therapies, he added.

For example, specialty medications are used by just 2% of health plan members but account for more than 46% of the plan's total drug spending, Wingerter said.

What's next?

The state Department of Financial Services will now evaluate the rate requests.

The department reviews the applications and the insurer's underlying calculations to "make sure that rate increases are justified and not excessive," according to its website.

During this review, the agency can request more information from the insurer and weigh comments from the public or policyholders.

Later in the summer, the department will approve or lower each insurer's proposed rates for 2024 — a process that almost always results in adjustments downward.

For example, in mid-August 2022, the department reduced insurers' requested rates by 48% in the individual market and by 52% for small groups, collectively saving the more than 1.1 million New Yorkers enrolled in those plans a total of almost $800 million, the department estimated.

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