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Hoosiers could pay more for Obamacare policies next year

May 31, 2016

Hoosiers seeking health insurance on the Obamacare marketplace could see health insurance premiums jump by double-digits next year.

Seven insurers have filed requests with the Indiana Department of Insurance, offering plans and seeking approval for new premiums. The average premiums range from an increase of 29 percent by Indianapolis-based Anthem Inc. to a decrease of 5.3 percent by Chicago-based Celtic Insurance Co.

The state has not approved any of the requests yet, so the changes could be more or less than requested. But similar filings in other states suggest insurers are feeling pressure to raise rates to cover higher costs, and that the trend is taking place nationwide.

Average premium requests for 2017 for the most popular type of Obamacare marketplace plans are 16 percent higher in the first nine states to make them public, according to an Avalere Health analysis.

The 16 percent average increase is for all silver-tier plans, which cover an average of about 70 percent of medical claims. The Avalere analysis was based on premiums for a 50-year-old male nonsmoker.

However, the average increase requested for the lowest-cost silver-tier plans was only 7 percent, and it was 8 percent for the second lowest-cost silver plans, Avalere Senior Vice President Caroline Pearson said.

“Rates are certainly going up more in 2017 than they did in 2016,” but the fact that premium increases are lower for the lowest-cost silver plans “tells you that insurers are still competing aggressively to win enrollment by being the lowest-cost insurer,” she said.

Anthem’s proposed increases in Indiana range from 19.8 percent to 41.1 percent across its various plans, according to its filing with the state.

Anthem spokesman Tony Felts said the higher rates are intended to cover anticipated claims costs driven by the increased use of medical services and higher drug costs. The company also blamed the federal government’s elimination of a cost-control mechanism known as reinsurance that was designed to help stabilize premiums.

“Combined, each of these factors contributes to upward pressure on insurance premiums,” Felts said.

Other big changes for Hoosiers include fewer plans to choose from. IBJ reported earlier this month that the nation’s largest health insurer, UnitedHealth Group, will stop selling individual Obamacare plans in Indiana next year.

The company, which has previously said it was losing hundreds of millions of dollars on the exchanges around the nation, will no longer offer policies on the individual marketplace here as of Jan. 1.

UnitedHealth, based in Minnesota, had sold plans on the exchange through a company called All Savers Insurance Co., which is legally based in Indianapolis.

Indiana was All Savers’ second-biggest market for growth during the first nine months of last year, pulling in $129 million in premiums, up from $12.2 million during the same period a year earlier.

In addition, UnitedHealth is not going to sell individual plans off of the marketplace, according to the Indiana Department of Insurance.

Another health insurer, Southeastern Indiana Health Organization (SIHO), also will not sell on the on the individual marketplace next year, nor will it sell small group insurance, the insurance department said.

The proposed rates for 2017 are being closely watched with the presidential election looming in November when open enrollment takes place.

“We're expecting that the final rates will come down somewhat, because that generally happens” after insurance regulators review them and grant approvals, Pearson said. In addition, she added, “Most consumers are protected from increases by premium subsidies which cap how much they spend per month.”

Under the ACA, marketplace enrollees with household incomes between 100 percent and 400 percent of the federal poverty level are eligible for premium tax credits to help them pay for coverage. The subsidies are based on the cost of the second lowest-cost silver tier plan in each marketplace.

Of the approximately 8.8 million consumers who were enrolled in ACA marketplace plans at the end of December 2015, about 84 percent, or some 7.4 million consumers, were receiving an advance payment of the premium tax credit averaging $272 per month, the Centers for Medicare & Medicaid Services reported March 11.

The average premium requested for 2017 for a 50-year-old male nonsmoker among all silver plans in the nine states Avalere studied was $521 per month; the average for the lowest-cost silver plan was $411 per month; and the average for the second-lowest-cost silver plan was $431 per month.

The nine jurisdictions that have so far reported all premium requests are the District of Columbia, Indiana, Maryland, Maine, New York, Oregon, Vermont, Virginia and Washington.

The premium requests for a 50-year-old male nonsmoker varied widely among the states, from an average 42 percent increase to $540 per month in Oregon to an average 25 percent decrease to $302 per month in New York for the second lowest-cost silver plan, according to the Avalere report.

Avalere also projected that just over 10 million people will have ACA exchange coverage by the end of 2016, well below initial Congressional Budget Office predictions that 21 million people would be enrolled then. As a result, the risk pool is smaller and sicker than many carriers initially assumed, and “premium increases may be necessary to account for the population enrolled and make the market sustainable over time,” it said.

Another report, released May 24, written by Urban Institute researchers, found that premiums increased an average of 8 percent from 2015 to 2016 for the lowest-cost silver plans in all 50 states and the District of Columbia. The report found that “the more competitors there are in a market the lower premiums are,” lead author John Holahan said.

Plans that had lower premiums in 2015 than the national average had higher increases in 2016, and plans with higher premiums had lower increases, Holahan said.

In markets with Medicaid managed care plans, such as those offered by Centene Corp. and Molina Healthcare Inc., “both premiums and premium increases were a lot lower,” Holahan said.

In addition, “Provider-sponsored plans were often very competitive and contributed to keeping premiums low,” he said.

Large national carriers, such as Aetna Inc. and UnitedHealth Group Inc., were “sometimes competitive,” Holahan said, but in general they had higher premiums.
 

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