State considers rate increases on the health exchange as another insurer drops out

June 22--As U.S. Senate leaders prepare to unveil their plan to remake the Affordable Care Act over time, Maryland officials must press ahead with the system as it stands for hundreds of thousands of residents.

The Maryland Insurance Administration held its first hearing Wednesday on the large rate increases being sought by three insurance carriers selling health plans to individuals on the state exchange. The hearing came as another carrier decided to pull out of the market. Cigna Health and Life Insurance Co. follows UnitedHealthcare, which stopped selling plans last year.

During the hearing, the administration heard from consumers and advocates who were frustrated with rate increases proposed by the dominant carrier on the exchange, CareFirst BlueCross BlueShield.

"The insurance company is blaming the law, the Republicans are blaming the Democrats and the Democrats are blaming the Republicans," said Elizabeth Miller, a Bethesda hairstylist, who implored insurance regulators to look past the debate and block rate increases. "You're my last line of defense."

The carrier proposed the largest average increase, 52 percent, among insurers offering plans to individuals under the health law known as Obamacare. The insurance regulators will decide later in the summer whether to allow that request, as well as revised requests from the other two carriers.

Kaiser Foundation Health Plan is now seeking an average 25.1 percent increase, up from 18.08 percent, and Evergreen Health wants a 65 percent increase, up from 27.8 percent.

Kaiser covers about a third of the market and Evergreen had been barred from selling plans last year as it converted to a for-profit outfit. Cigna covers less than 1 percent of the exchange enrollees. Officials there did not respond to a request for comment, but the insurance administration confirmed Cigna's withdrawal.

Al Redmer Jr., the state insurance commissioner, said the agency will do what is "actuarially justified," but he and others acknowledged that consumers need affordable coverage and carriers need to earn a reasonable profit. CareFirst officials say the insurer expects to lose $600 million in the four years it's been selling individual plans under Obamacare, though the policies represent only about 6 percent of its business.

It's unclear if and when officials in Washington will overhaul the law; Senate leaders say they will release their version of legislation Thursday and take a vote next week. A House version passed recently is estimated to result in a loss of coverage for millions of Americans. More than 400,000 Marylanders have gained coverage under the law through a Medicaid expansion and purchase of private insurance.

Chet Burell, CareFirst president and CEO, said the carrier has attracted the most sickly enrollees because of its geographic reach and access to doctors and hospitals. Past rate increases have been insufficient to cover them, he said. Burell also cited elimination of a so-called reinsurance program that helped insurers cover the most expensive consumers, he said.

He said he expects the Trump administration to stop enforcing the individual mandate, which likely would mean healthy people who offset the cost of sicker people would stop buying coverage. He also expects the federal government will stop subsidy payments that offset the cost of insurance for low-income people.

"In order to reflect that, rates have to go up sharply," Burell said in an interview before the hearing. "And then even more people will drop out, especially the healthiest. It feeds on itself. That's the classic definition of a death spiral."

But the hefty premium increases and losses that have driven insurers out of the exchange market are cited by conservatives as reasons why Obamacare is unsustainable. Consumers on Wednesday agreed that the rate increases are truly burdensome.

A group of more than three dozen advocates and others submitted testimony that the CareFirst rate requests are unjustified.

"It affects individuals, real people," said Leni Preston, president of Consumer Health First, which spearheaded the testimony.

Christopher Jakubiak runs a Towson planning and consulting firm and buys a family plan for himself and his wife and two kids. He said his premium will rise from about $1,000 a month this year to $1,600 in 2018, plus growing out-of-pocket costs. He told the insurance regulators that is a burden and challenged them to stop approving the increases.

"Each year you're asked to approve double-digit increases," he said to the insurance regulators. "If your business is failing, ... you change the model. If you approve these rates, you endorse the business model."

Regulators said they will hold a second hearing about the revised rate requests this summer before deciding on the rate requests.

meredith.cohn@baltsun.com

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