Early Obamacare 2018 Rate Increases Average 18 Percent

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By Sara Hansard

Proposed 2018 Obamacare premiums for the most popular type of exchange plan are 18 percent higher on average than in 2017.

That’s the finding of consulting firm Avalere Health, which released an analysis June 19 based on data from eight states where early rate filings were submitted. Applications for Affordable Care Act qualified health plans for the 39 states using the federal HealthCare.gov system are due June 21, with final submissions due Aug. 16. Issuers have until Sept. 27 to submit final signed agreements.

Premium increases are expected to be high for 2018 after increases averaging 25 percent in 2017. Some states face the prospect of few or even no insurers in the exchanges. Insurers have cited the uncertainty of federal funding for cost-sharing subsidies for low-income people as a major reason for high premium requests. Congressional Republicans and the Trump administration argue the exchanges were facing turmoil before President Donald Trump was elected due to sicker-than-expected enrollees.

Plan Participation Decreasing

In 2017 premiums for the most popular silver tier plans, which cover 70 percent of medical claims on average, increased 12 percent on average, with significant variation, and final rates will vary from proposed premiums, Avalere said. Forty-one percent of counties could see only one insurer offering plans, up from 33 percent in 2017, it said.

As of June 9, 47 counties with about 35,000 exchange participants had no insurers offering products, according to the Department of Health and Human Services. In Washington state, where there were two counties that didn’t have coverage, Premera Blue Cross will offer two plans in Grays Harbor County in 2018, Insurance Commissioner Mike Kreidler announced June 19.

Approximately 12.2 million consumers enrolled in marketplace plans during the 2017 open enrollment period that ended Jan. 31, the HHS reported.

Issuer Participation in Counties, 50 States and D.C., 2016-2018

“What we are seeing to date is that there is a deterioration across markets, and that premiums are headed up,” Dan Mendelson, president of Avalere, told Bloomberg BNA June 20. However, he added, “in virtually all markets there is going to be at least one plan that is offering insurance.”

In some markets where there are currently no offerings insurance companies are talking to regulators about whether they could fill the void in some circumstances, Mendelson said.

“Sometimes in adversity you create opportunity,” Mendelson said. “If no one’s in the market, a plan is in a pretty good position to have a conversation with an insurance regulator and strike a deal.”

Cleveland Clinic Making First Insurance Offering

The Cleveland Clinic is offering health insurance plans for the first time in five counties in the exchange in 2018, Bloomberg News reported. However, 18 other Ohio counties with 10,000 exchange participants still have no coverage, Bloomberg said. Anthem announced June 6 that it was leaving Ohio’s exchanges.

Rates still must be approved by regulators in most states. Meanwhile Senate Republicans are expected to release language for their own ACA repeal and replace bill this week following House passage of the American Health Care Act ( H.R. 1628) May 4.

The highest increase for the second-lowest-cost silver plan—the plan on which ACA subsidies are based—was 22 percent in Maryland, according to the Avalere analysis. But increased premiums in the state may depend on what is offered by Evergreen Health, a nonprofit cooperative started with ACA funding, which has been approved to convert to for-profit status, Al Redmer Jr., Maryland insurance commissioner, told Bloomberg BNA June 20.

Evergreen a Factor in Maryland Market

Evergreen has filed rates to re-enter the state’s individual market, but it probably won’t be able to do so until after Labor Day in early September, Redmer said.

Kaiser Permanente initially had the lowest requested increase in Maryland at 18 percent, but it has requested raising its rates between 20 percent and 25 percent after it became public that CareFirst, the state’s largest insurer, asked for increases as high as 59 percent, Redmer said.

Kaiser Permanente’s request was based on the assumption that many enrollees “may migrate from CareFirst,” and many of them are likely to have higher medical claims than Kaiser’s current enrollees, Redmer said.

`Significant’ Market Losses

“We’ve had significant losses in the market,” Redmer said. In Maryland’s individual market carriers lost more than a half-billion dollars in total from 2014, when the exchanges were started, through 2016, he said.

“We are on a course where the carrier losses are unsustainable,” as are the resulting premium increases, Redmer, who was appointed by Gov. Larry Hogan (R), said.

While certain federal funding for the cost-sharing reduction subsidies would help while the administration and Congress decide how to proceed with a court suit over the issue, Maryland instructed insurers to file rate requests assuming they would receive approximately $10 billion for the subsidies in 2018, Redmer said. “These big rate increases we’re getting have nothing to do with the cost-sharing reductions,” he said.

The high rate increases are based on exchange enrollment that is sicker and older than was originally expected, Redmer said.

Consistent Penalty Enforcement Needed

More consistent enforcement of ACA penalties for not having coverage is needed, Avalere’s Mendelson, who was associate director for health at the White House Office of Management and Budget during the Clinton administration, said. About 20 million people were either given exemptions from the penalty or paid it under the Obama administration.

Shortly after taking office Jan. 20, Trump issued an executive order instructing federal agencies to waive or defer parts of Obamacare that would “impose a fiscal burden” on states, individuals, or health-care providers. The order was interpreted by many as opening the door to even weaker enforcement of the unpopular individual penalty.

“These penalties have not been consistently enforced,” Mendelson said. “If they had been, we’d have a lot more people enrolled in this program.” Weak enforcement of the penalties has contributed to the instability of the exchange markets, he said.

In addition, Mendelson said, the Trump administration should clarify how rates will be calculated, including whether the cost-sharing reduction subsidies will be included or not.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com

For More Information

Premium Increases and Fewer Insurers Participating Expected in Exchange Market in 2018 is at http://avalere.com/expertise/managed-care/insights/first-look-initial-rate-filings-show-premium-increases-decreased-participat.County by County Analysis of Current Projected Insurer Participation in Health Insurance Exchanges is at https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2017-Press-releases-items/2017-06-13.html.Washington insurance commissioner Mike Kreidler's announcement is at http://src.bna.com/p2w.The HHS report on 2017 enrollment is at https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-03-15.html.Information on H.R. 1628 is at https://www.congress.gov/bill/115th-congress/house-bill/1628.

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