Pennsylvania approves major hikes in marketplace plan rates
Marketplace health plans see sharp increase for 2017
October 17, 2016 11:48 PM
Pennsylvania officials said the rate hikes are significantly higher than hoped but they were approved after the state insurance department realized it needed to do something to keep coverage available statewide.
By Steve Twedt / Pittsburgh Post-Gazette
Insurers seeking rate increases for their 2017 Affordable Care Act health plan offerings got that and more, as the Pennsylvania Insurance Department announced Monday it had approved rate hikes averaging 32.5 percent for individual plans and 7.1 percent for small group plans.
Insurance commissioner Teresa Miller said the rate hikes are significantly higher than she had hoped for, but they were approved after the department realized it needed to do something to keep coverage available statewide.
“We faced the real possibility that people in a number of counties in Pennsylvania would have no health plans being offered through the exchange and thus no way to access subsidies to help pay premiums,” she said.
As it is, 16 Pennsylvania counties — including 11 in the western region — have only one insurer offering plans through the marketplace, she said.
In some instances, the state has approved higher increases than insurers requested. For one individual marketplace plan, Pittsburgh-based insurer Highmark asked for a 48.1 percent increase and the state approved a 55.07 percent increase; for another, Highmark’s 38.4 percent increase has been bumped up to 45.42 percent by the state.
UPMC Health Plan, also in Pittsburgh, had requested a 6.5 percent increase for one ACA plan and received approval for a 9.3 percent increase, and another plan was approved for a 26.5 percent increase.
The approved rate increases represent an attempt to keep insurers in the marketplace after many, including Highmark Inc., suffered multimillion-dollar losses in the first rounds. Major insurers such as Aetna and United Healthcare had previously said they were pulling out from some individual marketplaces including Pennsylvania’s after this year.
“Given these difficulties, the department worked with insurers to make sure they continue to view Pennsylvania as a state in which they want to offer coverage through the exchange,” wrote the Pennsylvania Insurance Department in explaining why it approved the 55.07 percent increase on the Highmark plan.
Beginning in 2014, the Affordable Care Act marketplace has offered coverage for individuals who either could not get or could not afford insurance, often due to a pre-existing medical condition.
With many consumers eligible for subsidies to offset some of the premium costs, federal officials say Pennsylvania’s uninsured rate has gone from 10.2 percent in 2010 to 6.4 percent in 2015, representing 479,000 Pennsylvanians now covered. But there has been growing concern that some ground on that front could be lost if costs and premium revenues are not brought into balance.
The combined individual and small group marketplace plans represent about 10 percent of the total market including commercial plans, Ms. Miller said, a point underscored by federal officials.
Jonathan Gold, spokesman for the U.S. Department of Health and Human Services, said Monday that “the overwhelmingly majority of consumers will not be paying these increases.” Rather, most marketplace consumers “will be able to select a plan for less than $75 per month,” he said.
“Headline rate changes do not reflect what these consumers actually pay because tax credits reduce the cost of coverage below the sticker price and shopping helps consumers find the best deal,” Mr. Gold said. “Meanwhile, for the 60 percent of people in Pennsylvania with employer coverage, premiums have grown at some of the slowest rates on record since the Affordable Care Act was enacted.”
Ms. Miller said Pennsylvania plans — with rates that were among the lowest in the U.S. — have been underpriced and the 2017 rate increases represent an attempt to correct that.
The insurance department doesn’t expect to see a repeat of this next year, noting that it hopes “this rate increase represents a one-time correction to previous underpricing, and that in future years insurers will not need rate increases significantly above standard increases in medical costs.”
Ms. Miller said the state hopes to continue working with federal officials for other Affordable Care Act adjustments to assure the long-term viability of the marketplace.
Although Highmark previously has reaffirmed its commitment to continue offering marketplace plans, the insurer is not offering plans in every county next year, said Alexis Miller, Highmark senior vice president for its individual and small group business. The insurer is offering non-marketplace plans in those counties.
All totaled, Highmark is offering 18 plans in Western Pennsylvania next year, dropping eight plans while adding five plans to its lineup.
Highmark has calculated that its losses from its marketplace products exceeded $800 million since 2014, as the cost of treating enrollees outpaced revenue from premiums.
Highmark officials have filed suit against the federal government to collect more than $220 million the insurer says it is owed just for 2014 under the “risk corridor” provision of the Affordable Care Act meant to act as a backstop against insurer losses in the early years of the exchange.
UPMC Health Plan, meanwhile, has been a notable exception to the roster of insurers hit with major losses as officials there have said their products were not priced based on an assumption they would receive the risk corridor payments.
For 2017, UPMC is offering 24 plans in Allegheny County, including all plans offered this year plus an additional middle-range silver marketplace plan. UPMC says its silver plan offerings overall are the lowest priced in the state.
On Monday, insurance commissioner Miller said the department has filed an amicus brief supporting Highmark in its lawsuit, saying the payments to insurers for higher-than-expected claims would help stabilize the market and hold down premiums.
“Congress has simply reneged on this obligation.”
The open enrollment period runs from Nov. 1 through Jan. 31.
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