Individual health insurance costs are expected to climb across Indiana in 2017 as insurers continue to grapple with rising health care expenses and a market that was only recently overhauled by the federal Affordable Care Act.
Many who purchase coverage through insurance exchanges created under the law are eligible for subsidies or tax credits to offset rising costs. But those who make too much money to qualify for federal help will have to pay the full price of coverage—an amount that could nearly double in some cases. That could spell a steep increase for a group of consumers that can include small-business owners who haven't set up coverage through work, early retirees, and people who can't get coverage through a spouse's employer.
Anthem, one of Indiana's largest insurers, is seeking premium hikes ranging from nearly 20 percent to 41 percent for coverage it sells on and off the Affordable Care Act's public insurance exchanges. That would mean an average increase of about 29 percent, under a rate request the state's Department of Insurance has until Aug. 23 to approve.
The company covers fewer than 100,000 people with individual insurance plans sold both on and off the exchange in Indiana, spokesman Tony Felts said. That's a small part of the company's 3.5 million customers statewide, many of whom get insurance through their employer.
Felts said Anthem is seeking the premium hikes mainly due to factors not unique to Indiana: people are using more medical services; drug costs, especially for specialty medicines, have climbed; and an ACA reinsurance provision that helped insurers pay for large claims is going away.
Other insurers—including IU Health Plans, Care Source Indiana and MDwise Marketplace—are seeking smaller average increases that range from about 10 percent to about 15 percent. Physicians Health Plan of Northern Indiana, a small insurer, is seeking a 25 percent average rate increase.
Jonathan Mayo, a broker for Gregory & Appel in Indianapolis, is worried about the premiums some of his customers may see for 2017.
"I think it's going to be ugly," he said.
Industry watchers say one reason for the increases is that temporary government programs designed to provide financial support to insurers are ending. On top of that, some insurers have pulled out of Indiana, reducing competition that can help keep premiums down. Others underpriced their plans in an attempt to capture market share, or failed to accurately anticipate the needs of their customer base.
"If somebody is coming to you with a 40 percent rate increase. … usually it suggests the previous rates were underpriced or there was significant shift of people that caused those rates to be shifted," said David Axene, an insurance industry consultant, who added: "In trying to anticipate the future … sometimes you come in low."
Health insurers have faced several challenges in building their exchange business. Their initial wave of customers generated higher-than-normal claims in part because some of the uninsured had not used the health care system for years and were waiting for coverage to help pay for needed care.
Insurers also have struggled in many markets to add younger consumers who don't use as much health care and could balance those more expensive patients. Insurers say they also have been hurt by expensive patients who sign up outside regular enrollment windows and later drop coverage after they have received care.
Axene said it's most important to focus on what an insurance plan costs, as opposed to the percentage a premium increases in a given year.
Contrasted with some other states, Indiana consumers are making out comparatively well.
A recent analysis of nine states by the consulting firm Avalere Health found that Indiana's average anticipated premium increases were on the low end. The most popular type of plan is expected to increase by about 6 percent for a 50-year-old male who is a non-smoker. Other mid-to-low range plans are expected to cost roughly the same or even decrease a fraction.