Initial 2015 premiums filed for the Obamacare exchanges in Indiana ranged from as high as a 46-percent hike to as low as a 9-percent cut.
Those are the average changes in premiums proposed by the four health insurers that sold plans on the Obamacare exchange for 2014, according to their filings this month with the Indiana Department of Insurance. Depending on the plans customers choose, the changes could be significantly more or less.
Anthem Blue Cross and Blue Shield, the state’s largest insurer, wants to raise premiums an average of 9.7 percent—which it characterized as in line with its expectations before the launch of the Obamacare exchanges. Anthem's average premium next year is expected to be $5,935 per person.
“We’re really not surprised by how the experience played out,” said Anthem spokesman Tony Felts. The average age of Anthem’s individual customers this year is 42—a bit older than it experienced before the new Obamacare rules and exchanges took effect Jan. 1. But, Felts noted, “We went to the market with pricing that reflected that view.”
Older customers caused more problems for Fort Wayne-based Physicians Health Plan of Northern Indiana, which proposed the highest average premium increases of 46 percent. Its minimum requested premium increase is 31 percent and its maximum requested increase is 59 percent.
“Emerging enrollments have proven to be significantly tilted toward older ages,” David Peppler, a PHP actuary, wrote in the company's rate increase request. “It was assumed in 2014 pricing that age mix would be similar to that of group insurance populations. … In this case, the older-than-anticipated age mix is resulting in premium deficiencies as the older-age premium adjustment factors are insufficient to provide for the full older-age morbidity.”
“Morbidity” is insurance-speak for the prevalence of disease and medical needs in a group of people insured. Of PHP’s 46-percent rate increase, 25 percentage points of it are due to higher-than-expected morbidity and 7 percent are attributed directly to age. The rest of the increase is due to higher prices from doctors and hospitals and changes in the Obama administration’s program for reimbursing insurers for their losses.
The second-highest increase, 35 percent, was proposed by Indianapolis-based MDwise Inc. The company did not disclose the range of rate changes it expects. And MDwise CEO Charlotte MacBeth said even the 35 percent figure is certain to change.
That’s because just last week, the Obama administration’s Centers for Medicare & Medicaid Services issued final rules on how it will attempt to offset losses incurred by insurers during 2014.
Also, if Gov. Mike Pence’s proposal to expand the Healthy Indiana Plan is approved by the Obama administration, it will significantly alter the pool of Hoosiers that buy coverage via the exchanges.
“Without knowing how the new CMS rules and circumstances change, it’s hard to say where any of the rates will land,” MacBeth wrote in an email.
She declined to say, however, if she thought MDwise could remain competitive after a 35-percent increase.
It’s possible that even large premium hikes would be absorbed by corresponding increases in taxpayer-funded subsidies.
That’s because the size of the taxpayer subsidies is set so that buyers must pay only a certain percentage of their income to purchase the second-lowest cost plan in Obamacare’s silver category.
That means, so long as no insurer prices a silver plan lower than the lowest-cost plans in 2014, subsidies will rise to absorb premiums increases. But lower-priced policies would reduce the size of the tax subsidies, making any premium increases show through.
Among the more than 132,000 Hoosiers that selected health plans on the exchange for 2014, 89 percent qualified for subsidies.
There will be new entrants into the Obamacare marketplace in 2015, including Indiana University Health Plans, SIHO Insurance Services and CareSource.
And Coordinated Care, a unit of St. Louis-based Centene Corp., filed premium changes that range from a decrease of 15.5 percent to an increase of 53 percent. Its average change is projected to be a decline of 8.8 percent.
The Indiana Department of Insurance must approve any rate increases before they go into effect.